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Title: When do wholly owned subsidiaries perform better than joint ventures?
Authors: Chang, S.-J. 
Chung, J.
Moon, J.J.
Keywords: entry mode choice
joint venture termination
subsidiary performance
transaction cost theory
wholly owned subsidiaries
Issue Date: 2013
Citation: Chang, S.-J., Chung, J., Moon, J.J. (2013). When do wholly owned subsidiaries perform better than joint ventures?. Strategic Management Journal 34 (3) : 317-337. ScholarBank@NUS Repository.
Abstract: This study explores when wholly owned subsidiaries outperform joint ventures with local partners. In order to avoid the endogeneity problem inherent in foreign subsidiaries' operating mode decisions that might confound performance measurement, we employ the propensity score matching method, along with the difference-in-differences approach, and compare the performances of joint ventures turned wholly owned subsidiaries vis-à-vis continuing joint ventures. Based on foreign subsidiaries' financial data in China for 1998-2006, we find strong evidence that converted wholly owned subsidiaries outperform continuing joint ventures in industries characterized by high levels of intangible assets such as technology or brand, after controlling for factors that may affect the conversion decision. This finding is consistent with the prediction of transaction cost theory. Copyright © 2012 John Wiley & Sons, Ltd.
Source Title: Strategic Management Journal
ISSN: 01432095
DOI: 10.1002/smj.2016
Appears in Collections:Staff Publications

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