Journal of International Business Studies

, Volume 41, Issue 3, pp 437–450

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

  • Sumon Kumar Bhaumik
  • Nigel Driffield
  • Sarmistha Pal
Article

DOI: 10.1057/jibs.2009.52

Cite this article as:
Bhaumik, S., Driffield, N. & Pal, S. J Int Bus Stud (2010) 41: 437. doi:10.1057/jibs.2009.52

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.

Keywords

institutionsownership/control structuresfamily firmsforeign investorsoutward FDIemerging-market MNEs

Copyright information

© Academy of International Business 2010

Authors and Affiliations

  • Sumon Kumar Bhaumik
    • 2
  • Nigel Driffield
    • 1
  • Sarmistha Pal
    • 2
  1. 1.Aston Business School, Aston UniversityUK
  2. 2.School of Social Sciences, Brunel UniversityUK