Research Note and Commentary
Entry mode and equity level: A multilevel examination of foreign direct investment ownership structure
Article first published online: 24 APR 2007
Copyright © 2007 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 28, Issue 8, pages 857–866, August 2007
How to Cite
Mani, S., Antia, K. D. and Rindfleisch, A. (2007), Entry mode and equity level: A multilevel examination of foreign direct investment ownership structure. Strat. Mgmt. J., 28: 857–866. doi: 10.1002/smj.611
- Issue published online: 14 JUN 2007
- Article first published online: 24 APR 2007
- Manuscript Revised: 18 SEP 2006
- Manuscript Received: 24 JAN 2006
- foreign direct investment;
- transaction cost analysis;
- multilevel modeling
Over the last two decades, strategy researchers have sought to understand the ownership structure of firms' foreign direct investments (FDI) as reflected in entry mode and equity level. However, prior FDI research has ignored the interrelated nature of these key FDI decisions. In addition, prior research does not fully account for the fact that individual ownership structure decisions occur within the context of a firm's broader FDI portfolio, and thus reflect a wide and frequently unobserved range of parent firm and host nation effects. Our research seeks to address both of these limitations. Using a rich dataset of 4,459 subsidiaries established by 858 Japanese firms across 38 countries over a 9-year period, we specify a conditional bivariate, cross-classified multilevel model of FDI ownership structure. Our model enables the joint estimation of entry mode and equity level, accounts for the portfolio nature of FDI, and compares the relative predictive power of transaction cost- and experience-based explanatory variables across both facets of ownership structure. Copyright © 2007 John Wiley & Sons, Ltd.