more recent studies of FDI flows but have so far not been extended to the analysis of ownership structure.Many of the institutional studies of FDI have focused on FDI flows rather than on foreign ownership of existing FDI projects.These two questions may be related to each other but are sufficiently distinct to warrant separate approaches.We believe that incorporating institutions into the analysis of foreign ownership is a contribution to the FDI literature We use a unique dataset containing over 2,000 joint ventures located in Jiangsu and Zhejaing to get at the two central questions in this paper.First,how do institutions affect the ownership structures of FDI projects?Second,how does one potential mechanism-the domestic firms as joint-venture partners-illuminate the institutional determinants of the ownership structures of FDI projects?Using the bargaining framework,we set out to test the hypothesis that an institutional environment more nurturing of domestic private firms is associated with greater bargaining power-arising from weaker FDI preferences or stronger capabilities-of Chinese joint-venture partners and,all else being equal,greater Chinese Note the underlying presumption in such an analysis.Our paper presumes that a country's institutional environment,first and foremost,affects the host firms anchored there and that the institutional environment affects the ownership structures of FDI projects via its primary effect on the capabilities and resource constraints of local firms. 1The most detailed institutional analysis is on the connections between corruption and FDI(Wheeler and Mody, 1992:Wei.2000:Hellman et al.,2002).. For example,one can envision a scenario in which foreign investors invest in many projects but only retain small equity interests in each project,and a contrasting scenario in which foreign investors invest in one single project but retain all the equity interests in it.The relationship between FDI flows and foreign ownership would differ between these two scenarios. 77 more recent studies of FDI flows but have so far not been extended to the analysis of ownership structure.9 Many of the institutional studies of FDI have focused on FDI flows rather than on foreign ownership of existing FDI projects. 10 These two questions may be related to each other but are sufficiently distinct to warrant separate approaches.11 We believe that incorporating institutions into the analysis of foreign ownership is a contribution to the FDI literature. We use a unique dataset containing over 2,000 joint ventures located in Jiangsu and Zhejaing to get at the two central questions in this paper. First, how do institutions affect the ownership structures of FDI projects? Second, how does one potential mechanism—the domestic firms as joint-venture partners—illuminate the institutional determinants of the ownership structures of FDI projects? Using the bargaining framework, we set out to test the hypothesis that an institutional environment more nurturing of domestic private firms is associated with greater bargaining power—arising from weaker FDI preferences or stronger capabilities—of Chinese joint-venture partners and, all else being equal, greater Chinese 9 Note the underlying presumption in such an analysis. Our paper presumes that a country’s institutional environment, first and foremost, affects the host firms anchored there and that the institutional environment affects the ownership structures of FDI projects via its primary effect on the capabilities and resource constraints of local firms. 10 The most detailed institutional analysis is on the connections between corruption and FDI (Wheeler and Mody, 1992; Wei, 2000; Hellman et al., 2002). . 11 For example, one can envision a scenario in which foreign investors invest in many projects but only retain small equity interests in each project, and a contrasting scenario in which foreign investors invest in one single project but retain all the equity interests in it. The relationship between FDI flows and foreign ownership would differ between these two scenarios