Foreign parent control mechanisms and international joint venture performance

Abstract

Despite the strategic importance of foreign parent control mechanisms they have received scant attention in the discussion of international joint venture performance. This paper analyses the relationship between control mechanisms and efficiency as a possible proxy for performance measurement and reports two key findings. First, international joint ventures perform better when foreign parents possess majority equity ownership. Second, foreign parents' participation and support based on indirect control promotes performance compared with the case where foreign parents exercise direct and active control over the joint venture.