Abstract
This article aims at identifying the individual and joint impact of two « country-level variables », namely national distance and country risk, on the survival of international joint ventures in emerging countries. Research hypotheses predicting the negative impact of national distance and country risk on survival are formulated in this article. These research hypotheses are tested in a sample of 165 international joint ventures that were formed in Brazil between 1974 and 2003. These joint ventures were subjected to an event history analysis over a period of time ranging from 1974 to 2005. The empirical results show that the intercultural dynamics increases the instability of international joint ventures whereas the survival of these alliances does not seem to be affected by the economic and political uncertainty of Brazil. Furthermore, the national distance between local and foreign partners has effects on survival that are variable according to the life cycle of international joint ventures.
Highlights
During the early years of the Soviet Union, in November 1922, at the end of the civil war and in a context of major economic crisis, Lenin approved the formation of mixed capital firms
Drawing on the event history analysis, we identified the joint ventures that were still active at the end of the period at risk – namely, the censored international joint ventures (IJVs) – and those that were dissolved, sold off or bought out before the end of the period at risk – namely, the non-censored IJVs
The aim of this article was to identify the individual and joint impact of two “country-level variables” (KOGUT; SINGH, 1988) – national cultural differences and country risk – on the survival of IJVs formed in an emerging country, Brazil
Summary
During the early years of the Soviet Union, in November 1922, at the end of the civil war and in a context of major economic crisis, Lenin approved the formation of mixed capital firms (combining State/private and foreign/Soviet capital) They were the first ever international joint ventures (IJVs), which are organizational entities created and managed jointly by foreign and local firms. The opening up of new geographic markets accelerated, the WTO was set up, and the favorable regulations for foreign direct investment were introduced widely in different countries These developments motivated the multinationals to replace the IJV by other entry modes, such as whollyowned subsidiaries and acquisitions, which ensured them
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