Ownership strategy of Japanese firms: Transactional, institutional, and experience influences

We compare the effects of transactional, institutional, and experience infl uences on the ownership strategies of Japanese investors. Our theoretical d evelopment suggests that the equity position of a foreign investor should i ncrease as the specificity of the assets transferred to the foreign affilia te increases, but a lower equity position should be assumed when the foreig n investor requires complementary assets to establish a foreign entry. inte rnational experience and a strong institutional environment also should lea d to increases in the equity position of the foreign investor. These relati onships were tested with data on more than 1000 Japanese investments in nin e countries of East and South-East Asia. The results demonstrate that exper ience and institutional factors were the most important influences on the o wnership position taken in the foreign investment, while transactional fact ors had a much less important and a more ambiguous role. Copyright (C) 1999 John Wiley & Sons, Ltd.