Journal of International Business Studies

, Volume 39, Issue 7, pp 1133–1148 | Cite as

Ownership structure, strategic controls and export intensity of foreign-invested firms in transition economies

  • Igor Filatotchev
  • Johannes Stephan
  • Björn Jindra


This paper examines the relationships between foreign ownership, managers' independence in decision-making and exporting of foreign-invested firms in five European Union accession countries. Using a unique, hand-collected data set of 434 foreign-invested firms in Poland, Hungary, Slovenia, Slovakia and Estonia, we show that foreign investors' ownership and control over strategic decisions are positively associated with export intensity, measured as the proportion of exports to total sales. The study also analyzes specific governance and control configurations in foreign-invested firms, showing that foreign equity and foreign control over business functions are complementary in terms of their effects on export intensity.


FDI subsidiaries ownership structure strategy export intensity 



This research was supported by an EU research grant ‘EU Integration and the Prospects for Catch-Up Development in CEECs – The Determinants of the Productivity Gap’ (contract no. HPSE-CT-2001-00065). We thank Keith Brouthers, Saul Estrin, Klaus Meyer, Mike Wright, the participants of the 2006 Academy of Management Annual Meeting (Atlanta, USA), David K. Tse (the Departmental Editor) and two anonymous reviewers for their helpful comments.


  1. Agrawal, A., & Knoeber, C. 1996. Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Financial and Quantitative Analysis, 31 (3): 377–395.CrossRefGoogle Scholar
  2. Andersen, O. 1993. On the internationalization process of firms: A critical analysis. Journal of International Business Studies, 24 (2): 209–231.CrossRefGoogle Scholar
  3. Aoki, M. 1994. The Japanese firm as a system of attributes. In M. Aoki & R. Dore (Eds), The Japanese firm: Sources of competitive strength: 11–40. Oxford: Oxford University Press.CrossRefGoogle Scholar
  4. Aulakh, P., Masaaki, K., & Teegen, H. 2000. Export strategies and performance of firms from emerging economies: Evidence from Brazil, Chile and Mexico. Academy of Management Journal, 43 (3): 342–361.CrossRefGoogle Scholar
  5. Baysinger, B. D., & Hoskisson, R. E. 1990. The composition of boards of directors and strategic control: Effects on corporate strategy. Academy of Management Review, 15 (1): 72–87.Google Scholar
  6. Bevan, A., Estrin, S., & Meyer, K. 2004. Foreign investment location and institutional development in transition economies. International Business Review, 13 (1): 43–64.CrossRefGoogle Scholar
  7. Birkinshaw, J. 1996. Entrepreneurship in multinational corporations: The characteristics of subsidiary initiatives. Strategic Management Journal, 18 (3): 207–229.CrossRefGoogle Scholar
  8. Birkinshaw, J. 1997. How multinational subsidiary mandates are gained and lost. Journal of International Business Studies, 27 (3): 467–495.CrossRefGoogle Scholar
  9. Birkinshaw, J., & Hood, N. 1998. Multinational subsidiary evolution: Capabilities and charter change in foreign-owned subsidiary companies. Academy of Management Review, 23 (4): 773–795.Google Scholar
  10. Birkinshaw, J., & Morrison, A. J. 1995. Configurations of strategy and structure in subsidiaries of multinational corporations. Journal of International Business Studies, 26 (4): 729–753.CrossRefGoogle Scholar
  11. Buck, T., Filatotchev, I., Wright, M., & Demina, N. 2000. Exporting activity in transitional economies: An enterprise-level study. Journal of Development Studies, 37 (2): 44–66.CrossRefGoogle Scholar
  12. Buck, T., Filatotchev, I., Wright, M., & Demina, N. 2003. Insider ownership, human resource strategies and performance in a transition economy. Journal of International Business Studies, 34 (6): 530–549.CrossRefGoogle Scholar
  13. Carpenter, M., & Fredrickson, J. 2001. Top management teams, global strategic posture, and the moderating role of uncertainty. Academy of Management Journal, 44 (3): 533–546.CrossRefGoogle Scholar
  14. Claessens, S., & Djankov, S. 1998. Politicians and firms in seven Central and Eastern European countries. World Bank Technical Paper, World Bank, Washington, DC.Google Scholar
  15. Claessens, S., Djankov, S., & Lang, L. 2000. The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58 (1–2): 81–112.CrossRefGoogle Scholar
  16. Dichtl, E., Koeglmayr, H.-G., & Mueller, S. 1990. International orientation as a precondition for export success. Journal of International Business Studies, 21 (1): 23–40.CrossRefGoogle Scholar
  17. Dominguez, L. V., & Sequeira, C. G. 1993. Determinants of LDC exporters’ performance: A cross-national study. Journal of International Business Studies, 24 (1): 19–40.CrossRefGoogle Scholar
  18. Douma, S., George, R., & Kabir, R. 2006. Foreign and domestic ownership, business groups, and firm performance: Evidence from a large emerging market. Strategic Management Journal, 27 (7): 637–657.CrossRefGoogle Scholar
  19. Estrin, S., & Wright, M. 1999. Corporate governance in the former Soviet Union: An overview. Journal of Comparative Economics, 27 (3): 398–421.CrossRefGoogle Scholar
  20. Filatotchev, I., Hoskisson, R., Wright, M., & Buck, T. 1996. Corporate restructuring in Russian privatizations: Implications for US investors. California Management Review, 38 (2): 87–105.CrossRefGoogle Scholar
  21. Filatotchev, I., Buck, T., & Zhukov, V. 2000. Downsizing in privatized firms in Russia, Ukraine and Belarus. Academy of Management Journal, 43 (3): 286–304.CrossRefGoogle Scholar
  22. Filatotchev, I., Demina, N., Wright, M., & Buck, T. 2001a. Strategic choices, export orientation and corporate governance in privatized firms in Russia, Ukraine and Belarus: Theory and empirical evidence. Journal of International Business Studies, 32 (4): 853–871.CrossRefGoogle Scholar
  23. Filatotchev, I., Demina, N., & Kapelyushnikov, R. 2001b. The effects of ownership concentration on investment and performance in privatized firms in Russia. Managerial and Decision Economics, 22 (6): 299–313.CrossRefGoogle Scholar
  24. Filatotchev, I., Strange, R., Lien, Y.-C., & Piesse, J. 2007. FDI by firms from newly industrialized economies in emerging markets: Corporate governance, entry mode and location. Journal of International Business Studies, 38 (4): 556–572.CrossRefGoogle Scholar
  25. Geppert, M., & Williams, K. 2006. Global, national and local practices of multinational corporations: Towards a sociopolitical framework. International Journal of Human Resource Management, 17 (1): 49–69.CrossRefGoogle Scholar
  26. Hambrick, D. C., Geletkanycz, M. A., & Fredrickson, J. W. 1993. Top executive commitment to the status quo: Some tests of its determinants. Strategic Management Journal, 14 (6): 401–418.CrossRefGoogle Scholar
  27. Hendry, J. 2002. The principal's other problems: Honest incompetence and the specification of objectives. Academy of Management Review, 27 (1): 98–113.Google Scholar
  28. Hennart, J. F., & Park, Y. R. 1993. Greenfield vs. acquisition: The strategy of Japanese investors in the United States. Management Science, 39 (9): 1054–1070.CrossRefGoogle Scholar
  29. Hitt, M., Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. 1996. The market for corporate control and firm innovation. Academy of Management Journal, 39 (5): 1084–1109.CrossRefGoogle Scholar
  30. Hitt, M., Hoskisson, R. E., & Kim, H. 1997. International diversification: effects of innovation and firm performance in product-diversified firms. Academy of Management Journal, 40 (4): 767–798.CrossRefGoogle Scholar
  31. Hoskisson, R. E., Eden, L., Lau, C.-M., & Wright, M. 2000. Strategy in emerging economies. Academy of Management Journal, 43 (3): 249–267.CrossRefGoogle Scholar
  32. Hoskisson, R. E., Hitt, M. A., Johnson, R. A., & Grossman, W. 2002. Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies. Academy of Management Journal, 45 (4): 697–716.CrossRefGoogle Scholar
  33. Kornai, J. 1980. Economics of shortage. Amsterdam: North-Holland.Google Scholar
  34. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1997. Legal determinants of external finance. Journal of Finance, 52 (3): 1131–1150.CrossRefGoogle Scholar
  35. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1999. Corporate ownership around the world. Journal of Finance, 54 (3): 471–517.CrossRefGoogle Scholar
  36. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 2000. Investor protection and corporate governance. Journal of Financial Economics, 58 (1–2): 3–27.CrossRefGoogle Scholar
  37. Leonidou, L. C., & Katsikeas, C. S. 1996. The export development process: An integrative review of empirical models. Journal of International Business Studies, 27 (3): 517–552.CrossRefGoogle Scholar
  38. Lien, Y.-C., Piesse, J., Strange, R., & Filatotchev, I. 2005. The role of corporate governance in FDI decisions: Evidence from Taiwan. International Business Review, 14 (6): 739–763.CrossRefGoogle Scholar
  39. Luo, Y., & Peng, M. 1999. Learning to compete in a transition economy: Experience, environment and performance. Journal of International Business Studies, 30 (2): 269–296.CrossRefGoogle Scholar
  40. Major, I. 2003. Privatisation in Hungary and its aftermath. In D. Parker & D. Saal (Eds), International handbook on privatisation: 427–453. Cheltenham: Edward Elgar.Google Scholar
  41. Makhija, M. V. 2004. The value of restructuring in emerging economies: The case of the Czech Republic. Strategic Management Journal, 25 (3): 243–267.CrossRefGoogle Scholar
  42. McDougall, P. P., & Oviatt, B. M. 1996. New venture internationalization, strategic change, and performance: A follow-up study. Journal of Business Venturing, 11 (1): 34–40.CrossRefGoogle Scholar
  43. Meyer, K. E. 2002. Management challenges in privatization acquisitions in transition economies. Journal of World Business, 37 (4): 266–276.CrossRefGoogle Scholar
  44. Meyer, K. E., & Estrin, S. 2001. Brownfield entry in emerging markets. Journal of International Business Studies, 32 (3): 257–267.CrossRefGoogle Scholar
  45. Mickiewicz, T., & Baltowski, M. 2003. All roads lead to outside ownership: Polish piecemeal privatisation. In D. Parker & D. Saal (Eds), International handbook on privatisation: 402–426. Cheltenham: Edward Elgar.Google Scholar
  46. Milgrom, P. R., & Roberts, J. 1994. Complementarities and systems: Understanding Japanese economic organization. Estudios Economicos, 9 (1): 3–42.Google Scholar
  47. Milgrom, P. R., & Roberts, J. 1995. Complementarities and fit: Strategy, structure, and organizational change in manufacturing. Journal of Accounting and Economics, 19 (2–3): 179–208.CrossRefGoogle Scholar
  48. Mudambi, R. 1999. MNE internal capital markets and subsidiary strategic independence. International Business Review, 8 (2): 197–211.CrossRefGoogle Scholar
  49. Newman, K. 2000. Organizational transformation during institutional upheaval. Academy of Management Review, 25 (3): 602–619.Google Scholar
  50. Peng, M. 2000. Business strategies in transition economies. London: Sage.Google Scholar
  51. Peng, M. 2004. Outside directors and firm performance during institutional transitions. Strategic Management Journal, 25 (5): 453–471.CrossRefGoogle Scholar
  52. Peng, M., & Ilinitch, A. 1998. Export intermediary firms: A note on export development research. Journal of International Business Studies, 29 (3): 609–620.CrossRefGoogle Scholar
  53. Pohl, G., Anderson, R. E., Claessens, S., & Djankov, S. 1997. Privatization and restructuring in Central and Eastern Europe. World Bank Technical Paper #368, World Bank, Washington, DC.Google Scholar
  54. Rediker, K. J., & Seth, A. 1995. Boards of directors and substitution effects of alternative governance mechanisms. Strategic Management Journal, 16 (2): 85–99.CrossRefGoogle Scholar
  55. Roth, K., & Morrison, A. J. 1992. Implementing global strategy: Characteristics of global subsidiary mandates. Journal of International Business Studies, 23 (4): 715–735.CrossRefGoogle Scholar
  56. Sanders, G., & Carpenter, M. 1998. Internationalization and firm governance: The roles of CEO compensation, top team composition, and board structure. Academy of Management Journal, 41 (2): 158–178.CrossRefGoogle Scholar
  57. Spector, P. E. 1982. Summated rating scale constructions: An introduction. London: Sage.Google Scholar
  58. Stephan, J. 2004. Firm-specific determinants of productivity gaps between East and West German industrial branches. East-West Journal of Economics and Business, 7 (2): 11–38.Google Scholar
  59. Thomas III, L. G., & Waring, G. 1999. Competing capitalisms: Capital investment in American, German and Japanese firms. Strategic Management Journal, 20 (8): 729–748.CrossRefGoogle Scholar
  60. Uhlenbruck, K., Meyer, K., & Hitt, M. A. 2003. Organizational transformation in transition economies: Resource-based and organizational learning perspectives. Journal of Management Studies, 40 (2): 257–282.CrossRefGoogle Scholar
  61. Walsh, J. P., & Seward, J. K. 1990. On the efficiency of internal and external corporate control mechanisms. Academy of Management Review, 15 (3): 421–458.Google Scholar
  62. Welsh, L., & Luostarinen, R. 1988. Internationalization: Evolution of a concept. Journal of General Management, 14 (2): 36–64.Google Scholar
  63. Young, S., & Tavares, A. T. 2004. Centralization and autonomy: Back to the future. International Business Review, 13 (2): 215–237.CrossRefGoogle Scholar
  64. Zeckhauser, R. J., & Pound, J. 1990. Are large shareholders effective monitors? An investigation of share ownership and corporate performance. In R. G. Hubbard (Ed.), Asymmetric information, corporate finance and investment: 149–180. Chicago: The University of Chicago Press.Google Scholar

Copyright information

© Academy of International Business 2008

Authors and Affiliations

  • Igor Filatotchev
    • 1
  • Johannes Stephan
    • 2
  • Björn Jindra
    • 2
  1. 1.Sir John Cass Business School, City UniversityLondonUK
  2. 2.Halle Institute for Economic ResearchHalle (Saale)Germany

Personalised recommendations