Why IJV over WOS? Home country effect on the US and Japanese MNEs

Abstract

Purpose

This study aims to explore how sub‐dimensions of home country influence multinational enterprise (MNE) ownership strategy in international subsidiaries.

Design/methodology/approach

Following a grounded theory approach, the authors interviewed 36 managers of US and Japanese MNEs. Among 36 managers, 21 worked for Japanese firms, 12 for US firms, and three for the US‐Japanese IJVs.

Findings

This study proposes a list of cultural and resource‐based explanations for MNEs' divergent ownership patterns by nationality.

Research limitations/implications

This research focused on two home countries, Japan and the USA. Future studies are required to extend and validate the findings in this study.

Practical implications

By considering sub‐dimensions of home country effect, managers can make a more accurate prediction of the potential partner's willingness to form an IJV.

Social implications

This study suggests that host countries' ownership restriction can make divergent effects on foreign investors by their nationality.

Originality/value

The central contribution of this paper is identifying a set of underlying factors of home country effect and explicating their individual effect on MNE ownership strategy.

Citation

Jung, J.C. and Suh, T. (2013), "Why IJV over WOS? Home country effect on the US and Japanese MNEs", Journal of Asia Business Studies, Vol. 7 No. 2, pp. 153-170. https://doi.org/10.1108/15587891311319440