Bargaining power, ownership, and profitability of transnational corporations in developing countries

Abstract. As the bargaining power of the transnational corporations (TNCs) in the sample increased relative to the bargaining power of the host country, and as the desire of the TNCs for a high level of equity ownership increased, the percent equity ownership of the TNCs in their subsidiaries increased. The relationship between percent equity ownership and subsid-iary success from the TNCs ' viewpoint, however, was J-shaped. High and low levels of equity ownership were associated with high levels of success. Control of critical operational variables by the TNC was directly related to success. * Over the past 20 years there has been continuing controversy over the determinants and effects of different patterns of ownership and control of the subsidiaries of transnational corporations (TNCs) in less developed countries (LDCs). Some countries such as Singapore and Hong Kong place virtually no restrictions on the percentage of equity ownership held by TNCs in most sectors of their economies; others place severe restrictions on equity ownership by TNCs and prohibit it outright in many sectors of their economy; others require that foreign ownership be reduced or phased out over time. One of the advantages o