Abstract
This study is designed to shed further light on the foreign direct investment (FDI) decision by the family business, and address the question: Under what situation family-owned firms make the entry mode with high risk commitment. The data source for this study was obtained from Taiwan Economic Journal Database. The database is a comprehensive source for Taiwanese firms' foreign direct investments in 13 countries (Japan, U.S., Indonesia, India, France, Finland, Thailand, Malaysia, Netherlands, Philippines, Vietnam, Germany and Korea). This study included 2451 FDI projects. This study demonstrates that the formal and informal institutions influence a family firm's entry mode decision. In the informal institutions, the family- owned firms choose the joint venture (JV) arrangement. In the formal institutions, the family- owned firms choose the wholly owned entry mode. The results display what situation family-owned firms choose the entry mode.
Highlights
The result confirms that family-owned firms with informal institutional distance are more likely than
The most striking finding of the study is that family-owned firms choose joint venture (JV) in regard to informal institutions, but choose wholly owned mode in regard to formal institutions
The results indicate that family-owned firms adopt high risks in the high quality of formal institutions
Summary
Research Gap the family business makes strategic decisions [11.12]. Among of strategic decisions involve resources risk such as foreign investment, international involvement and diversification. Previous research has argued that the family business with risk-averse protect the family wealth, and the family business avoids high risk decisions [13]. Studies have proposed that the family business with risk-willing make high risk decisions for creating family value [14]. The paradox is that the family business with both risk-averse and risk-willing makes strategic decisions involving resources commitments of high risk
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