The antecedents and outcome of control in IJVs: A control gap framework

Abstract

Plenty of researchers have explored the relationship between parent firm control and international joint venture (IJV) performance. However, the conclusions of these researchers are inconsistent. Some studies suggest that total control from foreign parent firms produces better outcomes, while other studies consider that shared control or split control structures result in higher IJV performance. All of these studies argue that a parent firm’s control over an IJV would influence the performance of the IJV. This paper contributes to these debates by exploring the control gap, that is, the difference between desired control and exercised control of a parent firm. Evidence from 80 IJVs in Taiwan indicates that control gaps in the areas of manufacturing, financial, and human resource management have negative impacts on IJV performance. Empirical results also show that the level of a parent firm’s resource contribution to an IJV positively influences the parent firm’s desired control. The extent of a parent firm’s learning intent in marketing and R&D management is also positively linked with the degree of control desired by the parent firm. These findings provide important implications for the study of control structure in IJV management.