FOREIGN DIRECT MINORITYEQUITY INVESTMENTS AS STRATEGIC ALLIANCES AN EMPIRICAL STUDY OF THE IMPACT ON U.S. FIRMS 19791991

This research considers the incidence of foreign firms investing between 10 percent and 50 percent equity in U.S. corporations, or Foreign Direct MinorityEquity Investment FDMI. FDMI relationships are viewed with respect to international strategic alliances in general and are hypothesized to be moti...

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Bibliographic Details
Published in:International journal of commerce and management 1995-01, Vol.5 (1/2), p.48-68
Main Authors: Preece, Stephen B., Ajami, Riad A.
Format: Article
Language:English
Online Access:Get full text
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Summary:This research considers the incidence of foreign firms investing between 10 percent and 50 percent equity in U.S. corporations, or Foreign Direct MinorityEquity Investment FDMI. FDMI relationships are viewed with respect to international strategic alliances in general and are hypothesized to be motivated by market, technology, or production considerations. Both financial and operational performance measures are examined comparing three years prior to the FDMI with three years after. The research follows an ex post facto, quasiexperimental design with two control groups consisting of 99 companies each. Results indicate declining performance measures related to FDMI companies receiving FDMI as compared to a matched sample of peer firms. Strategic management, agency theory and other explanations are explored in light of these findings.
ISSN:1056-9219
DOI:10.1108/eb047305