Understanding the ownership structure choices of Finnish firms in Asian countries

ISSN： 0955-534X

Source： European Business Review, Vol.16, Iss.5, 2004-05, pp. : 494-510

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Abstract

This study, empirically investigates how the ownership-specific variables, location-specific variables and strategic motives have influenced the ownership structure choices of Finnish manufacturing firms in ten South and south-east Asian countries from 1980 to 2000. Very few studies in FDIs have been undertaken so far to empirically analyze the ownership-specific and location-specific variables together with the strategic motives in order to understand the ownership structure choices of the investing firms. To the best of our knowledge, this is the first study trying to analyze how the ownership-specific variables, location-specific variables, and strategic motives have influenced the ownership structure choices of Finnish manufacturing FDIs in Asian countries. The research results indicate that large international experience, low cultural distance, large market size, and high levels of economic welfare in the target country increases the probability of choosing wholly owned subsidiary (WOS) in order to undertake market-seeking and efficiency-seeking FDIs. Similarly, it has also been found that low levels of risks in the target country increases the probability to choose WOS in order to undertake risk-reduction seeking FDIs.