Executives' Assessments of International Joint Ventures in China: A Multi-Theoretical Investigation

Abstract

Despite the rich set of theories that have developed on international joint ventures (IJVs), little is known about what theoretical criteria senior executives actually incorporate in their judgments of IJV opportunities and partners. Empirical studies have often applied individual theories in a particularistic fashion, rather than recognizing the different theoretical perspectives that boundedly-rational executives may incorporate into their decision models. In this article, we combine decision criteria associated with multiple theories rooted in organizational economics to investigate how top executives process information on IJV opportunities in China. Using an established experimental technique known as policy capturing, we examine how executives cognitively weigh criteria from four prominent theories when making initial assessments of IJVs (i.e., the resource-based view, transaction cost economics, information economics, and real options theory). Our arguments and findings on executives' IJV decision models contribute to decision-making research on alliances and IJVs in China.