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Ownership control of foreign affiliates: A property rights theory perspective

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  • Driffield, Nigel
  • Mickiewicz, Tomasz
  • Temouri, Yama

Abstract

This paper applies property rights theory to explain changes in foreign affiliates’ ownership. Post-entry ownership change is driven by both firm-level characteristics and by the differences in the institutional environments in host countries. We distinguish between financial market development and the level of corruption as two different institutional dimensions, such that changes along these dimensions impact upon ownership change in different ways. Furthermore, we argue that changes in ownership are affected by the foreign affiliate’s relatedness with its parent’s sector, as well as by the affiliate’s maturity. We use firm level data across 125 host countries to test our hypotheses.

Suggested Citation

  • Driffield, Nigel & Mickiewicz, Tomasz & Temouri, Yama, 2016. "Ownership control of foreign affiliates: A property rights theory perspective," Journal of World Business, Elsevier, vol. 51(6), pages 965-976.
    • Handle: RePEc:eee:worbus:v:51:y:2016:i:6:p:965-976
    DOI: 10.1016/j.jwb.2016.08.003
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