Top management team trust, behavioral integration and the performance of international joint ventures

Abstract

PurposeThis study seeks to identify antecedents of trust among top managers representing partners in international joint ventures (IJVs) and to show how this trust influences IJV performance.Design/methodology/approachThe paper proposes that the national cultural distance of the foreign partner, the business similarity of partners' organizations and behavioural integration are antecedents to trust, and that trust is a key mediator through which these antecedents affect IJV performance. Data are collected through a field survey from IJVs in Beijing and Shenzhen, PRC, and employ regression analysis to test these propositions.FindingsIt is found that: trust across IJV factional subgroups is influenced by partners' business similarity and by the behavioural integration of top managers representing the partners from both sides; and this trust mediates the relationship between the behavioural integration of top managers in Sino‐foreign IJVs and overall venture performance. The effects of business similarity and partner national cultural distance on overall performance were not mediated by trust.Research limitations/implicationsThe sample of the study used is limited to one country only – China. Besides, the paper's measures of cultural distance and categorization of national origin of foreign partners of IJVs may be subject to criticism.Practical implicationsFirst, the paper explicitly hypothesizes and tests the role of trust as a mediator of the relationships between trust antecedents and IJV performance. This is done in order to develop a more detailed understanding of how fixed partner characteristics and adjustable group processes affect IJV outcomes. Second, the study finds evidence that supports situational perspective and developmental perspective of trust development, but not the deterministic perspective. This is also consistent with some additional qualitative evidence which the authors collected through interviews. Third, the results indicate that some trust antecedents have direct effects on IJV performance, while others affect IJV performance through partner trust.Originality/valueThe study's exploratory results offer important new information for IJV researchers and for managers of IJVs.