Marketing

Control (management)

Transaction cost

Microeconomics

Commerce

Joint venture

Economics

Computer science

Business

Subsidiary

Family business

Endogeneity

Management

Econometrics

Artificial intelligence

Industrial organization

Multinational corporation

Finance

Perspective (graphical)

Entrepreneurship Theory and Practice

We examine the effects of family control on entry mode choice by integrating Transaction Costs Economics with the family business literature. Using a dataset of 951 foreign investments, we investigate the role of family involvement on entry modes. After controlling for endogeneity, we find that if both the investing and the local firm are family firms, forming a joint venture is preferred, while if only the investing firm is a family firm, a wholly owned subsidiary is more likely. Results show that family control has an important impact on entry modes, an hypothesis that has not yet been fully explored.

Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective