Learning to manage risks in international R&D joint ventures through ownership decisions

Abstract

PurposeThis paper aims to examine the interaction between risk, learning and ownership decisions in international R&D joint ventures.Design/methodology/approachThe study focuses on international strategic R&D joint ventures of US firms. The sample is made up of 266 firms. Regression models are used in the testing of the hypotheses.FindingsThe authors show a clear difference between the effects of performance versus relational risks on ownership decisions in international joint ventures (IJVs). In response to performance risk, firms are less likely to pursue a majority ownership, whereas with relational risk the effect is opposite.Originality/valueA key contribution of this paper is that it shows the effects of performance versus relational risks on ownership decisions in IJVs. Another contribution is the finding that IJV experience moderates the effects of relational risk factors on firms' ownership decisions in joint ventures. With greater joint venture experience, firms are more likely to take a non‐dominant position in response to diverse partners as they develop routines and capabilities that allow them to better manage IJV partners and minimize the risk of partner opportunism without the need for majority ownership.