Factors Affecting Ownership Arrangements in Foreign Direct Investments
This paper analyzes the ownership arrangement in foreign direct investments (FDIs). Owing to the vast number of potential variables available to explain ownership arrangement behavior, wider background factors are proposed for explaining ownership arrangements. Furthermore, chains that may describe the causal path leading to the final decisions concerning ownership arrangement are investigated. In the empirical part of the study, the proposed model of FDI behavior for Finnish firms is estimated by LISREL. The estimation results indicate that the attractiveness of the target country and the investment target strategy are the main factors affecting ownership behavior. The firm basic cabability and its international experience appear to influence ownership behavior only indirectly.