Linking management control and interpartner relationships with performance in US-Chinese joint ventures

Abstract

This paper reports a study of the management control structures in US-China joint ventures. A conceptual framework for partner resource commitment, management control, interpartner working relationships, and venture performance is proposed. The relationships among these variables were empirically examined by using a comparative case study method and a quantitative analysis of a sample of 90 US-China joint ventures. The results of this study render strong support for the resource dependence argument concerning the determinants of management control in inter-organizational alliances. It is evident that the partners’ commitments of critical resources enhanced their bargaining positions in negotiations and, in turn, shaped the structure of management control they exercised in the venture. Accordingly, the pattern in which operational control over the venture is divided between the partners was found to have a significant effect on venture performance. The results also suggest that the working relationship between the partners has a profound impact on the venture’s overall performance. Furthermore, the results depicted considerable differences between the American and the Chinese partners’ strategic objectives. Whereas the former focused primarily on local market penetration, the latter aimed at the acquisition of advanced technology and management expertise as its foremost design.