The effects of home country formal and informal institutions on firms’ ownership strategies

The complexity involving ownership decisions has been intriguing researchers for the past decades. However, the relation established between ownership and institutions has yet a lot to uncover, since home country institutions remain neglected even though they strongly shape managerial practices and operations. This study examines the influence of home country institutions on ownership strategies, while also investigating the moderating effect that government ownership and experience have on this influence. In particular, this investigation, integrating prior research, seeks to identify whether firms choose shared or full ownership depending on their formal and informal home country institutional environment. The results, obtained using the EFIGE dataset that analyses more than 14000 firms from 7 European countries, suggest that firms originated from less developed institutional environments tend to choose shared ownership over full ownership. Therefore, this study contributes to the institutional theory by emphasizing the essential role played by home country institutions on the international business world