Record number :
1953998
Title of article :
Cooperative ventures in emerging economies
Author/Authors :
Rodrيguez، نويسنده , , Eric، نويسنده ,
Issue Information :
ماهنامه با شماره پیاپی سال 2008
Pages :
8
From page :
640
To page :
647
Abstract :
Foreign market entry strategy involves choices about which markets to enter and how to do it. Most of the literature on foreign direct investment reflects an interest in ownership structure decisions and the risks foreign investing firm may face. As recognized in many studies, one set of risks arises from public expropriation hazards, a function of the ability of the host countryʹs institutional environment to credibly commit to a given policy or regulatory regime. Empirical research has shown this hazard to have an impact on ownership levels. This study is a theoretical model that describes how multinational firms face moral hazard risk from their local partners and political risk from the host country when they decide to go abroad in a joint-venture alliance. I found that the greater the level of hazard expropriation, the lower the participation of the multinational firm in the final cash flow, except for when the multinational firm has the negotiation power and there is a high level of local investment protectionism. In that case, the multinational firm increases its participation in the final cash flow.
Keywords :
Political hazard risk , Joint ventures in emerging economies , Multinational firm investments
Journal title :
Journal of Business Research
Link To Document :