Ownership Strategies Research Articles

The determinants of MNE foreign subsidiaries’ performance: a systematic literature review and future research agenda

PurposeForeign subsidiaries of multinational enterprises (MNEs) operate in complex and competitive international environments, implement market and non-market strategies, manage resources and value-added activities and contribute to the overall performance of their parent firms. Thus, the research question on the determinants of MNE foreign subsidiaries’ performance is of interest to managers and academic researchers. The empirical literature has flourished over the recent decades; however, the domains are fragmented, and the findings are inclusive. The purpose of this study is to systematically review, analyse and synthesize the empirical articles in this area, identify research gaps and suggest a future research agenda.Design/methodology/approachThis study uses the qualitative content analysis method in reviewing and analysing 150 articles published in 24 scholarly journals during the period 2000–2023.FindingsThe literature uses a variety of theoretical perspectives to examine the key determinants of subsidiary performance which can be grouped into six major domains, namely, home- and host country-level factors; distance between home and host countries; the characteristics of parent firms and of subsidiaries; and governance mechanisms (the establishment modes and ownership strategy, subsidiary autonomy and the use of home country expatriates for transferring knowledge from the headquarters and controlling foreign subsidiaries). A range of objective and subjective indicators are used to measure subsidiary performance. Yet, the research shows a lack of broader integration of theories and presents inconsistent theoretical predictions, inconclusive empirical findings and estimation bias, which hinder our understanding of how the determinants independently and jointly shape the performance of foreign subsidiaries.Originality/valueThis study provides a comprehensive, nuanced and systematic review that synthesizes and clarifies the determinants of subsidiary performance, offers deeper insights from both theoretical, methodological and empirical aspects and proposes some promising avenues for future research directions.

Institutional distance and subsidiary performance of multilatinas: moderating effects of ownership strategy and government support

Purpose: In this article we investigated the effects of regulatory and normative institutional distances on Emerging Market Multinational Enterprises (EMNEs) subsidiaries performance, and the moderating roles of the ownership strategy and the government support. Design/methodology/approach: We applied fixed-effects regression models for panel data to analyze a sample of 296 subsidiaries of 32 Brazilian EMNEs, from 2006 to 2015. Findings: We found that institutional distance positively affects subsidiary performance. Although, full ownership, and government support positively affects subsidiary performance, subsidiaries with partial ownership located in more developed and institutionally distant host countries presents superior performance. We also found a positive relationship between government support, regulatory distance, and subsidiary performance. However, the same relationship with normative distance was not statistically relevant. Originality/value: By analyzing different ways in which the institutional context affects subsidiary performance and different approaches to increasing or mitigating those effects, this study contributes to furthering the understanding of how institutional issues affect EMNEs, and the role of the home country government. Conclusions: The findings of this study could help policymakers make informed decisions about investments in EMNEs. This is achieved by analyzing the impact of government financial aid on the performance of subsidiaries.

Ownership, freedom, belonging and God: Kibbutzim’s strategies to extend their “sharing” model

Purpose This study proposes a mix of historical, organizational and generational life cycles as explanatory variables for the “sharing style” of intentional communities such as kibbutzim in Israel. It evaluates the effectiveness of four strategies, namely, economic ownership, ultimate personal freedom, sense of belonging and religious belief employed by kibbutzim to sustain their lifestyles as sharing communities.Design/methodology/approach The study’s data collection methods include a mix of literature review and content analysis of interviews and observations conducted by the study’s researchers over a period of twenty years.Findings Environmental uncertainty, which served as one of the main motivators for the establishment of kibbutzim, has been diminished over their life cycle, forcing them to change their socioeconomic model of sharing. Most kibbutzim elected to employ the household’s economic private ownership strategy to move from the “maturity” to the “renewal” lifecycle stage, thereby avoiding “decline.” Three representative kibbutzim chose to deploy ultimate personal freedom, enhanced sense of belonging and shared religious practice strategies to reach the renewal stage.Practical implications Current crises, such as weather disasters, pandemics and wars, have demonstrated the justification for the existence of shared leadership communities. This study considers the advantages and pitfalls of economic and psychological conditions necessary for sustaining such communities over the period of their life cycles. We propose that out of the four strategies analyzed, only the strategy of economic private ownership can be sustained under conditions of global, national and commune’s increasing levels of individualism.Originality/value This study introduces historical, organizational and generational elements into the commonly described construct of organizational and product life cycles. It describes four variations of the communal sharing socioeconomic model that have been adopted to combat the degradation of the communes into the decline stage and evaluate their viability. The study therefore generalizes life cycle theory to non-for-profit organizations, making life cycle theory more specific.

Ownership share in cross-border acquisitions: does high-tech status of the target matter?

PurposeThe purpose of this study is to investigate the influence of the target firm’s high-tech status on the share of ownership decision in cross-border acquisitions (CBAs), which is an under-explored topic in cross-border M&A literature.Design/methodology/approachThe authors used Tobit regression and tested the hypotheses using a sample of 7,011 CBA transactions between 1999 and 2014. Inverse Mills ratio was used to address selection bias, and various robustness tests were performed.FindingsThe authors found that acquirers seek greater ownership share when acquiring high-tech firms, and that this relationship is moderated by various firm and national level factors. Specifically, the positive relationship between the high-tech status of a target firm and ownership share acquired is stronger when the firms’ primary operations are highly related or there is high formal institutional distance between the firms’ home countries, but it is weaker when acquirers have more prior M&A experience or there is high cultural and geographic distance between the firms’ home countries.Originality/valueWhile the topic of ownership strategy in CBAs is advancing, it is still limited, especially when examining acquisitions of high-tech target firms. The authors contribute to the research on CBAs and ownership strategy by focusing on the high-tech status of the target firm, and using a sample of both private and public target firms from 116 countries.

Home country’s economic and political institutions: firms’ ownership decisions in cross-border acquisitions

The influences of a home country’s economic and political institutions on acquirers’ cross-border acquisitions (CBAs) ownership strategies remains unexplored. Acquirers face endogenous uncertainty (i.e., uncertainty that can be resolved in part by acquirers) when transferring headquarters resources to foreign target firms and exogenous uncertainty (i.e., uncertainty that cannot be resolved by acquirers) when there is an unpredictable policy change. We argue that well-developed economic and political institutions in a home country play a market-supporting and constraining role in mitigating endogenous and exogenous uncertainty respectively, enabling acquirers to seek high ownership stakes in CBAs. We also argue that the importance of a home country’s well-developed economic and political institutions for acquirers’ CBA ownership strategic decisions depends on mutual trade dependence between the acquirers’ home country and the target firms’ host countries and also on the economic capabilities of the acquirers developed in different industries and political capabilities developed in different host countries. To test these arguments, we analyze 133,623 CBAs between 2000 and 2020 and find support for the distinct roles played by a home country’s economic and political institutions.

The rise of corporate landlords in Latin America: The case of Santiago, Chile

ABSTRACT In the past years, the tenure patterns of the Latin-American population have tended to move toward the rental market, changing the traditional relationship between finance and housing through homeownership. The incorporation of corporate landlords in the region is creating shifts in the expansion and structure of housing patterns. Institutional financial actors are increasing their investment portfolios by owning and managing residential buildings, transforming them into financial capital assets. This model represents 3% of the housing market in Santiago, expanding a multifamily high-rise model in downtown areas. The article’s central question is: How are corporate landlords shaping and transforming real estate dynamics and the housing market in Santiago? The analysis is centered on characterizing who these landlords are, elucidating their financial mechanisms and the main socio-urban characteristics of the model. This paper argues that corporate landlords are changing the Chilean real estate dynamics by expanding new ownership strategies. After a first rental financialization through affluent individuals with wealth who saw housing as a commodification and a way of expanding their assets with low mortgage rates, a second wave in the rental financialization process is occurring in recent years, a shift into a real estate market that is focusing on institutionalized landlords.

Marketisation, ownership and digitalisation strategies in the sport industry – generic insights and future research

PurposeThe motivation for this paper is to provide a deeper understanding of some of the important and trending topics in the sport industry. Besides this, to consider the changing landscape of ownership, strategies and organisation of several types of sports in the contemporary environment, there is a need for deeper contextual knowledge of how different sport/s, leagues, clubs, associations, teams etc. own, organise and strategise at local to national to regional to international contexts.Design/methodology/approachThis paper introduces the special issue on the sport industry that welcomes three interesting contributions of focusing on the important themes related to the sport industry. They include (1) digital transformation and needed capabilities, (2) fan engagement in a digital way using social media and finally (3) the relevance and relation of social capital in the organisational strategy of sports organisations.FindingsFour generic insights related to the themes and emerging trends in marketisation, ownership and digitalisation strategies in the sport industry are introduced in this paper. The first insight is that sports digitalisation and politicisation significantly impact the strategising, organising and networking activities of sports owners to foster value capture. Secondly, owners’ performance duality of marketisation of their sports clubs and vested business interests unravels the paradoxes of idealism and profit-maximisation. Thirdly, individual sports stars position themselves as an influential platform of value creation through on-field performance, social engagement and self-interests. Finally, the fourth insight is that the dual aims of sporting on-field success and profit making of large capital-funded sports clubs endanger the autonomy and governance of sports bodies/associations and an equitable sporting competition environment.Originality/valueThis paper provides an overview and reflections on the contributions of the papers in this special issue. The papers give different perspectives on how sport has been influenced by the development in society (1) with increasing digitalisation influencing organising of sport clubs and strategies for engaging fans, and (2) the influence of marketisation and politics in ownership strategies. As such, four insightful reflections are developed based on the originality of the contributions and the related extant literature presented on the themes of marketisation, ownership and digitalisation of the sport industry.

Innovation knowledge exchange within Chaebols and the ownership structure of their foreign subsidiaries

PurposeThis study examines how the characteristics of innovation knowledge exchanged among affiliate firms affect the ownership strategies adopted for their foreign subsidiaries.Design/methodology/approachThis study employs a cross-classified multilevel model to examine a sample of 185 Korean manufacturing affiliates derived from 49 Chaebols engaged in international diversification, along with their 1,110 foreign manufacturing subsidiaries.FindingsWhile exploratory innovation knowledge exchange lowers the affiliate's level of ownership in its foreign subsidiary, exploitative innovation knowledge exchange rather increases the affiliate's level of ownership in its foreign subsidiary.Research limitations/implicationsThis study advances the literature on intrafirm knowledge exchange by highlighting it as a determinant of ownership strategies. The study further shows that the characteristics of knowledge exchanged at the affiliate level not only determine the ownership structure but also have the potential to shape the direction in which the subsidiary develops its competencies.Practical implicationsThis study has practical implications for the managers of business group affiliates. The results suggest that managers should adapt their ownership strategies according to the type of knowledge exchanged at the affiliate level to achieve a balanced and synergistic effect on intraorganizational knowledge exchange.Originality/valuePrevious studies have extensively explored the performance implications related to knowledge exchange. However, there is a notable gap in understanding the mechanisms through which the value of knowledge transferred within an affiliate is realized. To address this gap, this study focuses on ownership strategy as a crucial factor and empirically examines how the characteristics of innovation knowledge exchanged among affiliate firms influence the ownership strategies adopted for their foreign subsidiaries. By investigating this relationship, this study provides valuable insights into the complex dynamics of knowledge exchange and its effect on ownership decisions within business group affiliates.

Analysis of the effect of growth strategies and hotel attributes on performance

PurposeIn this vein, this paper aims to provide empirical evidence on the following questions: Which expansion strategies offer better operational and economic performance? What effects does performance-related diversification have? How do other factors such as size, quality, service offered, location or seasonality interact with performance.Design/methodology/approachIn this paper, the analysis of the effects of growth strategies and hotel attributes on performance is carried out with a sample of 255 hotels that operate internationally. Using panel data and quantile regression, this study evaluates the effect of expansion and diversification on the hotels’ performance.FindingsFrom these findings, it appears that the equity strategy (own hotels) outperforms non-equity strategies (hotels under rental, franchise and management contract) at the operational level. However, the economic return of the property, both adjusted and unadjusted to risk, is lower under the property ownership strategy than under the franchise and management strategies because, in general, it requires a higher investment. Regarding diversification, the growth strategy based on related diversification in food and beverage services has a negative impact on performance, calling into question the synergies between the two businesses. However, an exception to this effect is seen among those hotels, mainly those in the Caribbean, that opt to provide all-inclusive services, since these hotels achieve better occupancy rates and more stable results.Research limitations/implicationsThis study has not taken into account the effect of hotel property revaluation on the performance of the ownership strategy, as there is no information on the historical average revaluation at the level of each individual hotel. This study has also been unable to include information regarding the level of competition and seasonality of sales.Originality/valueThis paper considers a wide number of factors that can influence the performance of hotels. Second, this is the only paper that studies the impact of growth strategies from the point of view of the hotel chain. Also, the sample considered uses data at the individual level on hotels and this research analyses not only operational performance but also economic performance.

The influence of an ownership strategy on board dynamics

The influence of an ownership strategy on board dynamics

Franchise capabilities and system performance: A configurational perspective

This study investigates the configurations that promote the performance of franchise systems. Drawing on the dynamic capabilities perspective, we describe franchise capabilities and propose a model that consistently articulates dynamic capabilities,operational capabilities (know-how), franchise ownership strategy (plural form versus “turnkey” franchisors), and franchise system performance. Using a configurational (fsQCA) approach on a sample of 119 France-based franchisors, we investigate the interplay of sensing and adaptive capabilities, business know-how and organizational know-how, and franchise ownership strategy that potentially drive franchise system performance. We contribute to the franchising literature by providing a nuanced understanding of how franchise systems should manage their capabilities, depending on their development strategies.

Inventories, Interiors, and Women’s Ambitions: Strategies of Property Ownership in Three Mid-19th Century Montreal Public Houses

Notarized inventories provide an important window onto the interiors of public houses, the image that keepers sought to project of their businesses and of themselves, and the type of guests they wanted to attract. In this micro history, I examine the degree of differentiation amongst three widows operating modest businesses located in highly trafficked Montreal neighbourhoods, in particular, the composition of their domestic capital, the business strategies they employed, and if they achieved social mobility. We know from earlier studies that movables were significant assets for earning a living, often critical to the survival of a widowed, separated, or abandoned woman. My argument goes further. I contend that women attempted, and some were able, to convert movables into immovable property, assets that were more secure and versatile. While publicans displayed a wide array of skills, statuses, and achievements, these three cases focus on the critical threshold, that interesting set of people at the boundary, aware of and struggling to achieve property ownership.

Navigating political risk: Protectionism and ownership strategy in cross-border M&As

Rising protectionism sentiment has led to increased scrutiny of cross-border mergers and acquisitions (CBAs). Informed by the legitimacy-based view, we posit that heightened protectionism in the host countries triggers legitimacy concerns towards foreign firms and presents a political risk that influences foreign acquirers’ ownership strategy in CBAs. Analyzing CBAs in the recent decade, we find that foreign acquirers tend to acquire greater ownership stakes to mitigate the political risk associated with protectionism. Further, bilateral relationships between the host and home countries involved in CBAs regarding economic dependence, political animosity, and social interactions linked to migration have differential moderating effects either easing or intensifying legitimacy concerns.

Paddling Together: Water Trails as Innovative Public Health Strategies.

Blueways can help improve health and quality-of-life by providing places for exercise, recreation, and community gatherings. The Rouge River Watershed is an industrialized region in Southeast Michigan with high rates of chronic disease and historic disinvestment in social and environmental conditions. The purpose of this article is to describe the process taken to develop an equitable, community-driven vision and approach for developing a water trail along the Lower Rouge River and to identify the key elements that emerged. Project leaders incorporated community-driven planning, community outreach, and community ownership strategies. The Rouge River Water Trail Leadership Committee engages the public, those affected by decisions, with a transparent, fact-based process. The public is given equal status and shares decision-making authority. This approach led to the development of a Water Trail Strategic Plan, community-informed recommendations for capital improvements, development of key relationships, and coalitions that provide a vehicle for ongoing community engagement and ownership. Five main elements, considered through an equity lens, go into building a water trail: (1) creating access points, (2) water quality monitoring, (3) woody debris management, (4) signage, and (5) developing a safety plan. Water trail development should consist of (1) environmental change through the creation of access points and safe, navigable waterways and (2) opportunities to utilize the infrastructure through programming and initiatives to make the trail accessible to all communities.

Mind the gap: impact of formal institutional distance and human rights differences between the host and home countries on emerging market multinationals’ choice of ownership strategy

Mind the gap: impact of formal institutional distance and human rights differences between the host and home countries on emerging market multinationals’ choice of ownership strategy

A Coasean approach to strategies of ownership and control: A commentary on Forsgren and Holm’s (2021) “Controlling without owning – owning without controlling”

A Coasean approach to strategies of ownership and control: A commentary on Forsgren and Holm’s (2021) “Controlling without owning – owning without controlling”

Responsible ownership fostering green tech innovation

Carbfix, an Icelandic green tech pioneer, has attracted worldwide attention for its novel solution to fight climate change by capturing and storing CO2 safely in basalt rock and eliminating it from the atmosphere. This study explores how responsible ownership can drive innovative solutions to deal with climate change and foster a sustainable future. An exploratory case study using archival data was applied, which provided evidence of relationship between responsible ownership and sustainable technology commercialization. The results show that an effective ownership strategy strengthens a focus on the SDGs on climate action. The results demonstrate as well how responsible ownership produces an innovative green tech solution throughout a long-time horizon to address CO2 reduction and commercialization. This study’s originality is that it delves into the business facets of a green pioneer by exploring the relationship between owners and green tech innovation. The theoretical contribution is on advancing the literature on responsible ownership in innovation and technology for the transition to a sustainable future. Using grounded theory methodology to analyze the empirical data, it is concluded that owners practicing responsible ownership can overcome many of the barriers to bringing innovative green tech solutions to market.

M&A performance in emerging markets: do they behave in unison or otherwise?

PurposeThe study aims to evaluate and compare the mergers and acquisitions (M&As) performance utilising a sample of deals originating from Brazil, Russia, India, China and South Africa (BRICS). In addition to nation-wise performance analysis, a further sub-sample analysis is conducted based on the target location (domestic and cross-border), development status (developed and emerging) and the acquired ownership stakes (majority and minority).Design/methodology/approachThe final sample of the study includes 7,105 deals announced between 2000 and 2019. M&A performance is proxied by the abnormal returns earned over the select event windows. Multiple parametric and non-parametric tests are employed for testing the robustness.FindingsThe results indicate significant performance differences across BRICS markets, with the highest and lowest abnormal returns reported for Chinese and Russian acquirers, respectively. The disaggregated analysis also affirms the performance differences for the select sub-samples.Research limitations/implicationsThe study highlights the need for acknowledging and expounding the differences in M&As across emerging markets. Further, the results of the study provide a possible explanation of the disagreement over the M&A performance results reported in the previous literature.Practical implicationsAcknowledging and understanding the potential performance differences based on location, ownership strategies and development status can aid executives in sharpening decision-making and also help general investors.Originality/valueThe study contributes by examining a comprehensive sample of deals across five major emerging economies, as against the majority of previous studies which have their results based on either single nation samples or have utilised only a sub-sample of domestic or foreign acquisitions.

When degree of integration mediates level of acquired ownership and post-acquisition innovation performance: evidence from cross-border technological acquisitions

PurposeThe purpose of this study is to test a model for cross-border technological acquisitions (CBTAs) focusing on the level of ownership acquired in the target firm and the acquiring firm's post-acquisition innovation performance (PAIP), with the degree of integration as a mediator, based on the dynamic capability perspective of the resource-based view. This study further concludes the role of the country-of-origin effect (COE) (when emerging economies' acquiring firms purchase technological resources from developed economies' target firms) on the success of the acquiring firms in CBTAs.Design/methodology/approachData on CBTAs initiated by 542 acquiring firms was quantified from four high technology industries from 1995 to 2015 for the empirical investigation of the research hypotheses. Hierarchical fixed year effect negative binomial regression technique was used to analyze the proposed model for the success of CBTAs.FindingsThe analysis of the CBTAs confirmed that acquiring firms who opt for a higher level of acquired ownership strategy increase the degree of integration of the target firm's technological resource stock. The level of acquired ownership improves the PAIP of the acquiring firms; however, the degree of integration positively accelerates the relationship between the acquired ownership and the PAIP. Considering the COE, acquiring firms that initiated CBTAs from emerging economies to purchase technological resources from developed economies' targets have firm-specific technological capability holes to execute the integration, which negatively impacts the emerging economies acquiring firm's PAIP.Originality/valueThis study contributes to the CBTAs literature by exploring the enabling role of the degree of integration between the level of acquired ownership and the PAIP of the acquiring firms. Further, this study put forward empirics on the COE of the acquiring firms for their integrative capability to integrate the target firm's resource stock and subsequent innovation performance.

Strategic asset-seeking foreign direct investments by emerging market firms: the role of institutional distance

PurposeThis study examines the impact of formal and informal institutional distances on the foreign ownership strategies of emerging market firms (EMFs).Design/methodology/approachThis is an empirical study relying on two sets of data collected over two time periods, 2006–2008 and 2017–2019, for publicly-listed Chinese companies.FindingsGreater formal institutional distances in the host and home countries make EMFs less likely to use joint ventures (JVs), while greater informal distances make EMFs more likely to use the JVs. When both formal and informal institutional distances are high, the use of JVs is more likely. These results are affected by the goal of the foreign direct investment (FDI) project, with strategic asset-seeking (SAS) FDI projects favoring the use of wholly owned subsidiaries (WOSs).Research limitations/implicationsThis study relies on cross-sectional data from publicly-listed Chinese companies, which may limit the generalizability of the findings.Practical implicationsEMFs investing in advanced countries should carefully assess the tradeoffs between transactional cost efficiency and legitimacy in making their foreign ownership decisions. If the goal is to access strategic assets, EMFs should consider WOSs to ensure the transfer of strategic assets and create value for the parent company.Originality/valueThe findings show that formal and informal distances between institutions have different impacts on foreign ownership strategies, providing empirical evidence for the need to balance conflicting cost-efficiency and legitimacy considerations when businesses make such strategic decisions. The authors show how this balance depends on the goal of the FDI project.