Why would a U.S. company launch a business in, say, China or India without a local partner? Managers have long assumed that the best way to capitalize on opportunities abroad is to ally with local companies. These partners already know the market, are willing to share the investment expense, and can curry favor with local governments. But in a study of more than 3,000 American transnational corporations, we found that these companies are increasingly opting to go it alone. Between 1982 and 1997, the percentage of U.S. companies with minority stakes in foreign affiliates fell from 17.9% to 10.6%, while the percentage of fully owned affiliates rose from 72.3% to 80.4%.
A version of this article appeared in the March 2004 issue of Harvard Business Review.
