Abstract
This paper develops a network theory based framework of manufacturing equity-based partnership formations and provides an empirical test in the context of the automotive industry. Specific theoretic hypotheses are formulated regarding the implications of the network structure for a firm’s partner selection in manufacturing joint ventures. The roles of network theory constructs such as network centrality and remoteness on new manufacturing joint venture formations are explored using a dynamic framework. A comprehensive time series panel dataset with 3,249,051 observations containing the joint venture information of 1,158 automotive firms collectively engaging in 589 manufacturing joint ventures over 19 years is utilized to test the hypotheses. Results provide empirical support for the role of network structure in equity based partnership formation and reveal significant differences in variable effects between original equipment manufacturers and component suppliers.
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