Abstract
This paper extends the internalization approach to the theory of the multinational enterprise (MNE) to include an expanded role for equity joint ventures. Using the transaction cost paradigm of Williamson, this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries. Also presented is empirical work on joint-venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment.
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*Paul W. Beamish is Assistant Professor of Business Policy and International Business at the University of Western Ontario. He received his Ph.D. degree in Business Administration from Western, and was winner of the Barry M. Richman Dissertation Award in International Management for the Academy of Management (1986).
**John C. Banks is Assistant Professor of Business Policy and International Business at Wilfrid Laurier University in Waterloo, Ontario and a Ph.D. candidate in International Business at York University (Canada).
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Beamish, P., Banks, J. Equity Joint Ventures and the Theory of the Multinational Enterprise. J Int Bus Stud 18, 1–16 (1987). https://doi.org/10.1057/palgrave.jibs.8490403
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DOI: https://doi.org/10.1057/palgrave.jibs.8490403