The Effect of Institutional Environment and Governance Choices on IJV Foreign Partner Opportunism

Abstract

Whereas institutional environments are important determinants of transaction costs in IJV management and performance, prior studies have paid limited attention on their impacts on partner opportunism. Building on the institution- based view, this study examines how host country government role affects IJV foreign partner opportunism. The authors posit that host government resource dependence and policy uncertainty increase foreign partner opportunism, and their impacts are differentially constrained by formal (i.e., contract specificity) and informal (i.e., shared vision) governance mechanisms. The results of 188 IJVs in China show that contract specificity, but not shared vision, is effective in curtailing the effect of resource dependency on foreign partner opportunism. In contrast, shared vision, but not contract specificity, weakens the effect of policy uncertainty on foreign partner opportunism. These findings provide important research and managerial implications on how to manage foreign partner opp...