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Does ownership structure of emerging-market firms affect their outward FDI? The case of the Indian automotive and pharmaceutical sectors

Author

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  • Sumon Kumar Bhaumik

    (School of Social Sciences, Brunel University, UK)

  • Nigel Driffield

    (Aston Business School, Aston University, UK)

  • Sarmistha Pal

    (School of Social Sciences, Brunel University, UK)

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.

Suggested Citation

  • Sumon Kumar Bhaumik & Nigel Driffield & Sarmistha Pal, 2010. "Does ownership structure of emerging-market firms affect their outward FDI? The case of the Indian automotive and pharmaceutical sectors," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 437-450, April.
    • Handle: RePEc:pal:jintbs:v:41:y:2010:i:3:p:437-450
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