The Influence of Host Country Experience on Backward Venturing

Abstract

This study argues that with the increased operational uniqueness and complexity of international joint ventures (IJVs) associated with backward venturing, the host country experience of foreign firms may be less beneficial or even harmful to IJV performance. In support of this argument, our analysis using data on IJVs in Japan shows that when IJVs are associated with backward venturing, the effect of host country experience heterogeneity and host country experience within the IJV industry on reducing IJV failure rates decreases, while greater host country experience outside the IJV industry increases the IJV failure rates.