Title: Coping with uncertainty in FDI entry mode choices: differences between family and non-family businesses

Authors: Ya-Wei Yang; Anthony Kuo; Ming-Sung Kao; Yi-Chieh Chang; Yao-Tung Chen

Addresses: Department of Finance and International Business, Fu Jen Catholic University, Xinzhuang, New Taipei City 24205, Taiwan ' Department of Management Science, National Yang Ming Chiao Tung University, Hsinchu 30010, Taiwan ' Department of Finance and International Business, Fu Jen Catholic University, Xinzhuang, New Taipei City 24205, Taiwan ' Master's Program of Business Administration in Southeast Asia, National Taipei University of Education, Daan, Taipei City 106, Taiwan ' Department of Risk Management and Insurance, Ming Chuan University, Shilin, Taipei 111, Taiwan

Abstract: This study examines how firms cope with internal (behavioural) uncertainty and external (environmental) uncertainty when they make FDI entry mode decisions, and the possible differences between FBs and non-FBs. Drawing from the Transaction Cost Economics (TCE) tradition and new internalisation theory, we hypothesise that all firms tend to choose Joint Venture (JVs) over Wholly-Owned Subsidiaries (WOSs) when they encounter high uncertainty. We further hypothesise that, due to FBs' concerns of Socioemotional Wealth (SEW), they are more likely than non-FBs to choose JVs when coping with high internal uncertainty and external uncertainty. The empirical results partially support our hypotheses, suggesting that FBs and non-FBs cope with internal uncertainty differently: FBs exhibit a higher tendency to choose JVs when they cope with internal uncertainty. However, FBs and non-FBs make similar FDI entry mode decisions when coping with external uncertainty. Findings in this study contribute to FDI entry mode studies, as well as FB internationalisation research and new internalisation theory.

Keywords: entry mode; family business; FDI; new internalisation theory; joint ventures; socioemotional wealth; uncertainty.

DOI: 10.1504/EJIM.2024.136457

European Journal of International Management, 2024 Vol.22 No.3, pp.407 - 438

Received: 25 Aug 2019
Accepted: 07 Jun 2020
Published online: 02 Feb 2024 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article