Why IJV over WOS? Home country effect on the US and Japanese MNEs

Purpose – This study aims to explore how sub‐dimensions of home country influence multinational enterprise (MNE) ownership strategy in international subsidiaries. Design/methodology/approach – Following a grounded theory approach, the authors interviewed 36 managers of US and Japanese MNEs. Among 36 managers, 21 worked for Japanese firms, 12 for US firms, and three for the US‐Japanese IJVs. Findings – This study proposes a list of cultural and resource‐based explanations for MNEs' divergent ownership patterns by nationality. Research limitations/implications – This research focused on two home countries, Japan and the USA. Future studies are required to extend and validate the findings in this study. Practical implications – By considering sub‐dimensions of home country effect, managers can make a more accurate prediction of the potential partner's willingness to form an IJV. Social implications – This study suggests that host countries' ownership restriction can make divergent effects on foreign investors by their nationality. Originality/value – The central contribution of this paper is identifying a set of underlying factors of home country effect and explicating their individual effect on MNE ownership strategy.