Impacts of National Congruence and Incongruence on International Joint Venture Completion

Abstract

How do repeated ties influence the international joint venture (IJV) completion? We address this question by considering the joint influences of repeated ties held by foreign and local firms and incongruence/congruence between countries. Repeated ties have been often viewed as an advantage of JV partners, which may help complete the announced IJV deal by the same partners. We argue that the impact of repeated ties on IJV completion depends on whether it meets or violates expectations held by the host atmosphere. Specifically, drawing on expectancy violations theory, we argue that repeated ties as past fulfilment of expectations by IJV partners increase the likelihood of announced IJV deal completion because past collaborations bring partners into a psychological contract with each other that aligns their expectations for future collaboration. However, such advantage of repeated ties may turn to be a liability when partners’ home and host countries experience animosity caused by military conflicts and communication barriers resulting from different languages. Using a sample of announced IJV deals in a global setting, we find supportive evidence of our theoretical predictions.