1. ¹Department of Business Administration, University of Illinois at Urbana-Champaign, Champaign, USA
2. ²Department of Management & Organization, National University of Singapore
3. ³Department of Educational Psychology, University of Illinois at Urbana-Champaign, Champaign, USA

Correspondence: X Luo, Department of Business Administration, University of Illinois at Urbana-Champaign, 208 Wohlers Hall, 1206 S. 6th Street, Champaign, IL 61820, USA. Tel: +1 217 265 0438; Fax: +1 217 244 7969; E-mail: luo2@illinois.edu

Received 7 March 2007; Revised 14 July 2007; Accepted 14 November 2007; Published online 25 September 2008.

Abstract

This study examines the impact of national corporate governance models on inward foreign direct investment (FDI) in emerging economies. We consider three potential mechanisms, and conduct an empirical test of how family ownership and control in large group-affiliated firms in Taiwan affect joint venture investment from US and Japanese firms during the period 1988–1998. Results support the neo-institutional perspective of FDI developed in this study: the home-country corporate governance models are likely to shape foreign firms' choice of local partners.