文摘
for Essay One: The Choice between Joint Venture and Wholly Foreign-owned Subsidiary: A Political Economy Approach. Existing studies of foreign direct investment FDI) entry modes focus on factors shaping investors choice between joint venture JV) and wholly owned subsidiary WOS), with policy bias from host country government assumed as given or unitary. We relax these assumptions to examine how variations in decision making by gatekeepers at different levels of the government affect the organizational forms of FDI in China, where national policies have been biased toward JVs, yet WOSs have nevertheless been growing -- largely as a result of local governments bending the rules. Based on a simple game-theoretic model about investor-gatekeeper negotiations between foreign investors and gatekeepers, we posit that the national government tends to have greater bargaining power with investors than local governments to maintain the policy bias, which is not necessarily consistent with the preferences of local governments. The extent to which local governments deviate from this bias because of weaker bargaining power and/or preference inconsistency, however, depends greatly on their information asymmetry and bargaining power with the national government. We formulate several hypotheses and test them with industrial census and local public finance data. The results of analysis suggest that intra-governmental fiscal relations and controls offer useful clues to understanding the organizational patterns of FDI entry.