Partial Acquistion as an Entry Mode in Transition Economies

Multinational enterprises often acquire stakes in an existing enterprise when entering emerging economies. Thispaper examines the determinants of entry mode choices with a special focus on these partial acquisitions, which have received little attention in the scholarly literature. We show that partial acquisitions have features that aredistinct from other modes with respect to the transfer of resources to the subsidiary and the determinants ofentry mode choice.Recent research suggests that a buyer prefers partial acquisitions, when a seller possesses asymmetrici nformation advantages. However, other studies have suggested that partial acquisition results from sellers'preference for partial divestment. We propose a different perspective that is grounded in the influence of stakeholders on the transfer of ownership rights and find that partial acquisitions are preferred when negotiations are subject to significant stakeholder interference.