Partner Dependence of International Joint Ventures and Venture Takeover

Abstract

This study examines the takeover of international joint ventures (IJV) by foreign and local partners respectively from a resource dependence perspective by emphasizing the mechanism of resource inaccessibility. We argue that a partner firm’s resources that are needed by the other partner but inaccessible by the other partner if the IJV is terminated will reduce the likelihood of IJV takeovers. Using a sample of IJVs established in China, we find that state ownership reduces the likelihood of IJV takeovers by foreign partners and the effect is strengthened by the business interference of local governments. Moreover, export intensity reduces the likelihood of IJV takeovers by local partners but the effect is weakened by regional market protection. These findings have implications beyond the learning approaches of IJV longevity.