Inward joint venture experience and entry mode choice of Chinese firms abroad

Purpose Since joint venture experience obtained from inward FDI may create a positive or negative impact on ownership mode choice, it is difficult to predict its direct impact. The purpose of this paper is to combine the organizational learning and agency perspectives to find whether CEO power can moderate the effect of inward joint venture experience. Design/methodology/approach Using a sample of 337 foreign entries conducted by 77 Chinese firms during 1998-2008, this study has tested some interaction effects of inward joint venture experience and CEO power measures. Findings The author finds that inward joint venture experience interacts with CEO ownership and CEO duality, respectively, to have a negative impact on the selection of high-equity mode. Originality/value This study contributes to entry mode literature by finding that inward (but not merely outward) FDI experience can influence entry mode choices and by combining agency theory and the organizational learning perspective to solve the theoretical conflicts created by the two opposite effects of a FDI experience.