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Exploring location‐specific assets and exploiting firm‐specific advantages: an integrative perspective on foreign ownership decisions
Author(s) -
Tseng ChiungHui
Publication year - 2007
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.13
Subject(s) - business , subsidiary , dynamism , asset (computer security) , complementary assets , extant taxon , sample (material) , perspective (graphical) , industrial organization , set (abstract data type) , multinational corporation , marketing , face (sociological concept) , finance , social science , physics , computer security , quantum mechanics , evolutionary biology , sociology , computer science , biology , chemistry , chromatography , artificial intelligence , programming language
Exploiting existing assets and exploring new assets are two major and often concurrent forces driving firms to invest abroad. Moving beyond prior attention to their separate effects on foreign ownership decisions, this study examines their integrative impact. I develop hypotheses aligning a set of firm‐specific advantages with asset‐seeking motives, and test these relationships on a sample of Taiwanese overseas investments. I find that wholly‐owned subsidiaries are preferred to joint ventures when multinationals are able to tap into host innovatory dynamism by employing extant technological capabilities and to access local natural resources by leveraging corporate scales. Nonetheless, multinationals face difficulties in deploying marketing knowledge in different contexts and thus are more likely to choose joint ventures for an aggressive foreign market entry. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.