Abstract
This study examines the IJV partnership strategy from an institutional perspective. A firm entering a foreign country via an IJV can partner with (1) a local firm from the host country, (2) a firm from the same home country or (3) a firm from a different foreign country, i.e. a third country. Focusing on formal institutions (or regulatory institutions), we first conceptualized how institutional profile of the host country and institutional distance between the host country and the home country can determine the partner choice. Based on a large data set of 1373 IJVs, we then empirically show that foreign firms are more likely to partner with a firm from the home country or from a third country (compared to partnering with a local firm) when the host country institutions are stronger. We also find that foreign firms are more likely to partner with a firm from the home country (compared to partnering with a local firm) when the institutional distance between the host country and the home country is lower.
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