Title: Collaboration of foreign investors with local family business groups in Turkey: implications on firm performance

Authors: Sibel Yamak; Bengi Ertuna; Haluk Levent; Mehmet Bolak

Addresses: Faculty of Economic and Administrative Sciences, Galatasaray University, Çirağan Yolu No. 36 Ortaköy, 34357 Istanbul, Turkey ' School of Applied Disciplines, Bogaziçi University, Hisar Kampus, Bebek, 34 342 Istanbul, Turkey ' Faculty of Economic and Administrative Sciences, Galatasaray University, Çirağan Yolu No. 36 Ortaköy, 34357 Istanbul, Turkey ' Faculty of Economic and Administrative Sciences, Galatasaray University, Çirağan Yolu No. 36 Ortaköy, 34357 Istanbul, Turkey

Abstract: This study investigates the nature of the collaborations of the foreign investor with the local family business groups, drawing out a range of possible implications on performance. Embracing a multi-theoretical approach, we use a panel data regression analysis on a sample of non-financial companies listed in Istanbul Stock Exchange during the period of 1999-2002. We find that the interaction of the foreign investor with local business groups may have both positive and negative consequences on performance, depending on the nature of the collaboration. In the case of local firms, there is a positive relationship between performance and the presence of a chairman who is a member of the family that owns the business group. Having such a chairman seems to have a negative effect on performance when foreign investors are involved. However, equity partnership with a local family business group contributes positively to the performance of foreign-involved companies.

Keywords: foreign ownership; family business groups; institutional theory; emerging markets; Turkey; firm performance; chairman; boards of directors; collaboration; foreign investors; local businesses; equity partnership.

DOI: 10.1504/EJIM.2015.067846

European Journal of International Management, 2015 Vol.9 No.2, pp.263 - 281

Published online: 06 Mar 2015 *

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