The Choice between Joint Ventures and Wholly Owned Subsidiaries : the Case of Japanese Direct Investment in Europe

This empirical study focuses on Japanese manufacturing, which established new entities in the manufacturing sector in the European Union. We are focusing on the choice of the MNE's between taking full ownership of their affiliate, and sharing it with another firm. The paper aims at providing further empirical evidence on the influence of some key variables in explaining it. Our results provide initial support for using a model which includes institutional and cultural variables, as well as transaction cost variables to predict firms' choices between joint venture and wholly owned subsidiaries in international expansion. Our findings also suggest that some host country's influence may act as a modifying or moderating variable in the diversification mode choice. m m