Article
Journal of International Business Studies advance online publication 29 October 2009; doi: 10.1057/jibs.2009.52
Does ownership structure of emerging-market firms affect their outward FDI? The case of the Indian automotive and pharmaceutical sectors
Sumon Kumar Bhaumik1, Nigel Driffield2 and Sarmistha Pal1
- 1School of Social Sciences, Brunel University, UK
- 2Aston Business School, Aston University, UK
Correspondence: N Driffield, Economics and Strategy Group, Aston Business School, Aston University, Birmingham B4 7ET, UK. Tel: +44 (0) 121 204 3209; Fax: +44 (0)121 204 3306; E-mail: n.l.driffield@aston.ac.uk
Received 30 November 2007; Revised 16 March 2009; Accepted 9 April 2009; Published online 29 October 2009.
Abstract
This paper examines the impact of ownership structures of emerging-market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI. Our results suggest that family firms and firms with concentrated ownerships (both ubiquitous in emerging markets) are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates outward FDI. We conclude that organisational forms such as family firms, which are optimal outcomes of institutions prevailing in emerging markets, may be suboptimal in a changing business environment in which outward FDI is necessary for access to resources and markets.
Keywords:
institutions, ownership/control structures, family firms, foreign investors, outward FDI, emerging-market MNEs
