Anticipated duration of international joint ventures: A transaction cost perspective

Abstract

Abstract Many international joint ventures have a pre-determined duration in the formation contract. However, what influences the ex ante anticipated duration has not been well researched. In this study, we applied the autonomy versus cooperation adaptability of transaction costs economics to examine the pre-determined duration of joint ventures. We developed hypotheses based on the argument of asset specificity, small numbers problem, and environmental uncertainties. Based on a sample of 7049 international joint ventures in China (1979–1996), we find that the longer anticipated duration is associated with bigger asset investment, higher local government affiliation, and lower host country risk. This study provides new insights on the research regarding the longevity of joint ventures.