Foreign ownership in Chinese joint ventures: A transaction cost analysis

The transaction cost framework is used to identify the factors that influence the percent ownership of foreign partners in joint ventures with China. The ownership literature is extended and new empirical evidence of the theoretical predictions is presepted. Sociocultural distance, economic risks and industry-related factors are identified as potential factors determining the percent ownership. The findings support the prescribed relationships of the first two factors and not the third, probably due to the fact that old technologies are being transferred to China in a joint venture partnership.

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