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Why do firms convert their joint ventures into wholly owned subsidiaries?: A multiple case study of Swedish firms' joint ventures in India and China
Linnaeus University, School of Business and Economics, Department of Marketing.
Linnaeus University, School of Business and Economics, Department of Marketing.
2017 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

International Joint Ventures are important for international Business. In recent years, firms started to convert their International Joint Ventures into Wholly Foreign Owned Enterprises. However, there is only a limited understanding for the conversion of International Joint Ventures into Wholly Foreign Owned Enterprises. The purpose of this study is to offer reasoning for this phenomenon. The theoretical framework that was developed for this thesis is based on the FDI Motive theory and the OLI framework. From a methodological perspective, a deductive approach is followed. The qualitative research was using a multiple case study design to collect primary data to answer the research questions.

The results of this study suggest, that two aspects of the FDI Motive theory have an effect on the International Joint Venture conversion into a Wholly Foreign Owned Enterprise. For the market seeking motive, firms believe to be able to better maximize their market share by taking full control over the subsidiary. Also, the resource seeking motive is in this thesis identified as an important reason for the conversions, as companies see especially advantages in taking full control over labour in those markets. However, the Strategic Asset Seeking and Efficiency Seeking motives are not included in the study. Also, several changes of OLI factors were identified as impactful for the conversion. The decrease of cultural difference between home and foreign market, the increase of perception of market size, gaining of international experience as well as the decrease of risk in the foreign market are all factors which are important for the reasoning of converting an International Joint Venture into a Wholly Foreign Owned Enterprise. In addition, no correlation between the conversion and the enforcing of contracts or the size of the company were observed in this study.

Furthermore, this thesis suggests that there are also other factors that were not identified by the theoretical frameworks. Lack of trust in the partner, liberalisation of governmental regulations, bad financial performances of the International Joint Ventures and economic crises are aspects that have an influence on conversions as well.

The findings of this thesis will help Swedish based firms to understand the phenomenon of firms converting their International Joint Ventures into Wholly Foreign Owned Enterprises in India and the People’s Republic of China.

Place, publisher, year, edition, pages
2017. , p. 59
Keywords [en]
International Joint Venture, Wholly Foreign Owned Enterprise, Conversion of International Joint Ventures into Wholly Foreign Owned Enterprises, FDI Motives, OLI Theory, Emerging Markets
National Category
Business Administration
Identifiers
URN: urn:nbn:se:lnu:diva-67476OAI: oai:DiVA.org:lnu-67476DiVA, id: diva2:1136520
Subject / course
Business Administration - Other
Educational program
International Business Programme, 180 credits
Supervisors
Examiners
Available from: 2017-10-09 Created: 2017-08-28 Last updated: 2017-10-09Bibliographically approved

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Stämpfli, Simon FlorianVladimirov, Nikita
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CiteExportLink to record
Permanent link

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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
  • rtf