Control Position Strategy, Cultural Distance, Conflict Resolution Strategies and Performance of International Joint Ventures

Abstract

Facing fierce global competition, firms often establish international joint ventures (IJVs) with foreign firms (Kwon, 2013). However, researchers notice a high rate of IJV failure (e.g. Hennart, Kim and Zeng, 1998). One of the key reasons is that firms often have different goals and ways of communications. Another reason is that inter-partner conflicts often lead to dissolution of partnership (Fey and Beamish, 1999; Pajunen and Fang, 2013). Thus, understanding conflict is crucial to organisations (Boonsathorn, 2007, Das and Kumar, 2010; Krone and Steimel, 2013) since conflict resolution strategies of parent firms affect IJV performance (Fey and Bearmish, 1999; Lu, 2006; Yavas, et al., 1994). Lin and Germain, 1998) suggest that foreign parent firms differ in their choice of conflict resolution strategies (CRS). Wang, Lin, Chang and Shi (2005) notice that conflict handling styles of partner firms becomes an important topic in IJV research, and White III, Joplin and Salama (2007) maintain that conflict resolution strategy is an underexplored area in the international business and management literature.