Control In International Joint Ventures Research Articles

Control, innovation and international joint venture performance: The moderating role of internal and external environments

This study aims to analyze how parent control strategies affect the degree of innovation in international joint ventures (IJVs) and how different types of innovation strategies - divided into radical and incremental innovation strategies - influence the performance of IJVs. This study uses the most widely adopted definition and operationalization of control in IJVs by Geringer and Hebert (1989), including the three dimensions: mechanisms, focus, and extent of control. These relationships are further analyzed by integrating internal and external moderating factors and their connections with IJV performance. Our theoretical analysis proposes that various control strategies differently influence an IJV’s innovation activities under various internal environmental moderating factors. These, in turn, differently influence the IJV performance. Furthermore, we suggest that the external environmental factors moderate the relationship between innovation strategies and performance of IJVs.

Management Control in International Joint Ventures in the Infrastructure Sector

Management Control in International Joint Ventures in the Infrastructure Sector

Trust, Knowledge Transfer and Control in IJVs: The Case of Four Greek Firms

The main objective of this paper is to investigate specific factors and their impact on the development of trust and on knowledge transfer success in International Joint Ventures (IJVs) with at least one Greek partner. We further expand our previous work and argue that the type of knowledge (tacit/explicit) and the proper control mechanism play an important role for the creation of trust between partners and affect knowledge transfer success. Four, in depth interviews with presidents/CEOs of Greek companies with IJV participation, were conducted. Overall, they consider the transfer of knowledge from their companies to the IJVs as very successful. The results indicate that tacit knowledge is considered to be one of the major strengths of the Greek companies and among their most important contributions to the IJVs. Furthermore, tacit knowledge and trust were revealed as key factors to IJV success. Finally, our findings reveal that formal and clear control mechanisms are positively related to the development of trust when they are established at the initial stages of the IJV establishment.

A Meta-analysis of Factors Leading to Management Control in International Joint Ventures

Abstract In international joint ventures (IJVs), management control exerted by parent firms is fundamental since it can direct employees' activities to strive for the overall goals, to safeguard parent firms' idiosyncratic investments and to decrease opportunistic behaviors. Using a meta-analytic approach, we investigate the main factors influencing management control in IJVs. A search of the published and unpublished literature uncovered 45 articles that yielded 329 reported correlations between the factors and management control with a total sample size of 15,252 IJVs. Results indicate that the factors can be ordered in the following way in terms of the average size of their association with management control: resource contribution; equity share; trust; and strategic importance to the IJVs. Three moderators including operating country (China versus other countries), industry type (manufacturing versus service) and management control type (formal control versus informal control) were proposed to examine the heterogeneity issue. Our meta-analysis suggests that there is a bias of the empirical studies given that a majority of the samples are IJVs operating in the Chinese manufacturing industry, which indicates that results of this meta-analysis may not be representative of all IJVs and that future empirical research should include IJVs in other countries and in other industries.

Technology transfer, specific local knowledge and entrepreneurial partner control in international joint ventures

Previous research has sought to demonstrate the influence of control of an IJV on achieving the learning objectives of the partners involved. However, the effect that certain types of learning have on the control of the IJV, which are vital for the success of the internationalization of the entrepreneurial firm, has yet to be explored. The results from case studies of six IJVs show that, during the post-formation stage, the configuration of entrepreneurial partner control over the IJV is conditioned by both technology transfer and by learning specific local knowledge by the entrepreneurial partner. The study also shows that the negative relation between trust and control suggested by the literature is limited to cases where trust has broken down. Greater levels of trust are also compatible with greater control with a view to appropriately exploiting when firms see the need to intensify control or need to implement new control mechanisms in order to properly exploit the resources contributed to the IJV.

Management information systems and the control of international joint ventures: evidence from the Czech Republic

Although the international joint venture (IJV) literature has expanded rapidly during the past two decades, the role of management information systems (MIS) in such collaborative ventures has attracted much less research attention. In this exploratory study carried out in the Czech Republic, applications of MIS in the control of three IJVs were examined. Senior management was interviewed regarding: a the use of existing MIS and their role in managing joint venture activities b the evolution of systems since the joint venture was formed c current problems or shortcomings in operation of the systems and in their content d plans for future development. The study concludes that, where significant communications are an important feature of IJV management, early consideration should be given to the nature of control appropriate to the venture and its impact on existing and required MIS capabilities.

Equity ownership and control of international joint ventures in the retail sector

International joint ventures (JVs) are a critical entry mode for international retailers. As a result of limited research on JVs in retailing, many significant formation decisions have not been addressed. Among the most important of these decisions is the ownership structure arrangement. This study investigated the determinants of JV equity ownership with seven British multinationals. The study found that JV equity ownership is often simultaneously influenced by multiple stimuli (or determinants) within organisational, partner and host-market domains. Equal ownership in JVs is partly determined by resource gaps, experience and managerial perceptions of partner trust and commitment during negotiations. Equity is only one source of control in retailing JVs. Some retailers prefer majority equity to influence the JV's strategy/policy context and confer legal voting rights at decision-making deadlock. The same retailers do not wish to dominate the JV. Other retailers are highly sceptical of equity to exert control and influence in retail JV operations. The study concludes with managerial implications and future research directions.

Host-country policies and MNE management control in IJVs: Evidence from China

In international joint ventures (IJVs), partner firms exert three types of management control: output, process, and social. Since management control critically influences IJV success, it is essential to understand what factors drive the development of the control system. Prior studies have focused mainly on IJVs’ internal conditions, and have largely neglected external institutional influences on IJV control. In this study we explore how host-country policies affect MNE partners’ control over their IJVs. Using a sample of IJVs in China, we find that MNE partners tend to exercise less output and process control when minority equity restriction is present, greater process control when they receive government incentives, and less social control when they are required to partner with state-owned enterprises. In contrast, the results of a post hoc analysis show that local partners’ control activities are not significantly influenced by these policies. Our findings provide new insights into IJV management by demonstrating the impacts of regulatory institutions on partners’ control activities.

Parent contribution and organizational control in international joint ventures

AbstractOrganizational control scholars have recently noted how control use is not singular in organizations, but rather, different types of control are used to achieve different purposes. In international joint ventures (IJVs), we suggest that output, process, and social control are exercised by both foreign and local parent firms. We then hypothesize that a parent firm's usage of these three control types is influenced by its resource contributions. Using a sample of IJVs in China, we find that property‐based contribution is linked with output and process control, and knowledge‐based contribution is related to process and social control. The results also show differences in control practices between foreign and local parent firms. The findings provide important implications for the design and implementation of control systems in IJVs.

Private control and collective control in international joint ventures

Abstract and Key Results ▪ This study separates joint venture control into private and collective control and examines how these two distinct types of control in IJVs are influenced by dyadic relations between cross-cultural partners. ▪ Private control involves unilateral actions taken by an individual party to maximize its own interests and gain, whereas collective control involves bilateral actions taken jointly to pursue collective gain. ▪ This study demonstrates that private and collective controls are neither exogenous nor predetermined but are instead shaped by mutual relationships between partners, together with transactional needs and environmental parameters. ▪ Our analysis shows that superior dyadic relations, such as resource complementarity, operational integration, objective conformity, and interparty attachment, restrain private control and associated opportunism while enhancing collective control and associated cooperation.

The Relationship between Trust and Control in International Joint Ventures: Evidence from the Airline Industry*

The Relationship between Trust and Control in International Joint Ventures: Evidence from the Airline Industry*

Control in Japanese–Chinese Joint Ventures: Antecedent Factors and Effect on Performance from the Japanese Viewpoint

The relationship between ownership, control, and performance has been the focus of most previous research on international joint ventures (IJVs). However, there has been little empirical and systematic study on this topic in the context of Japanese–Chinese joint ventures (JVs). Based on data collected from Japanese managers, this study reconfirms that ownership ratio is the foremost determining force for control in IJVs. At the same time, with the inclusion of additional factors that, although not necessarily having a legal basis, are important in international management of parent firms, this paper finds that interdependence in physical-process resources between parent firms and JVs and strategic monitoring by the parent firms are also significant factors for control. As for the relationship between control and performance, this paper divides IJV performance from the Japanese perspective into two kinds, export- and local-oriented, and finds that control by Japanese parents is significantly linked to the former, but not the latter, indicating that the prominence of control is contingent on the parent firm's distinct objectives at the IJV.

Investors' resource commitments and information reporting systems: control in international joint ventures

This paper examines the effects of resource commitments on information reporting in international joint ventures (IJVs). Resources provided by a parent company to an IJV are expected to impact on the intensity and focus of information reported to it from that IJV. Findings from 20 Sino–British joint ventures confirm that a parent's resource commitment to the IJV, and the control this affords affects the information it receives from the IJV compared to that received by the other parent. They illustrate how the structuring of information feedback is a purposive control mechanism. The experience of the British parent companies suggests that an effective structure for feedback of IJV information requires integration between the provision of technology and occupancy of relevant IJV management positions.

Negotiating control and achieving performance in international joint ventures: A conceptual model

Abstract Adapting well-established organization theories to international joint ventures (IJVs), this paper develops an overarching theoretical model of the determinants and effects of parent control of IJVs from an interpartner bargaining power perspective. Drawing upon power dependence, transaction costs, and agency theories, we argue that the relative bargaining power between IJV partners serves as the key determinant of control structure, and that control exerts a direct effect on the venture's performance. In addition, government influence and interpartner working relationship are critical factors that complicate the linkage between control and performance but may help to explain past conflicting results. Propositions regarding these relationships are formed for future empirical test, and implications and directions for future research are provided.

Antecedents and Effects of Parent Control in International Joint Ventures

Using a sample of 90 US–China manufacturing joint ventures, this study empirically tested a grounded‐theory model of the antecedents and the effects of the structure of parent management control in international joint ventures. The results suggest that competitive and cooperative dynamics occur simultaneously between joint venture partners. On one hand, the relative bargaining power between the partners, derived from the negotiation context and from contributing critical resources to the venture, respectively, is a determining factor in management control; and the level of operational control exercised by a partner over the venture has a positive effect on the extent to which this partner's strategic objectives are achieved. On the other hand, the quality of the interpartner working relationship was found to have a strong, positive relationship with the achievement of strategic objectives for both partners.

Control of international joint ventures

Prior research has found that many international joint ventures (IJVs) fail. Some authors have suggested that control problems are one of the primary causes of IJV failures. However, little IJV-related research has focused on control issues. This paper reports the results of a largely exploratory study of the control practices employed by partners involved in three arguably successful IJVs. The study found some control-system similarities among the three IJVs, but it also found significant differences related to the use of dispute-settling mechanisms, control focus (broad vs. narrow), and control tightness. The paper describes some of the factors that seem to cause the differences and, thus, provides a start for a contingency theory of IJV control systems.

Investment and control in international joint ventures: the case of China

In this study, we explore several factors affecting the amount of control that foreign companies have over their joint ventures in China. Managers working in sixty-seven international joint ventures were asked to report the share of equity held by the Chinese and foreign partners; the extent to which each partner had contributed important non-capital resources; the ratio of IJV board members appointed by each partner; the nationality of managers holding key executive positions in the IJVs; and the amount of strategic and operational control that each partner enjoyed. Results showed that equity share is the major lever for the exercise of strategic control and also influences operational control through its effects on the appointment of board members and appointments to key executive positions. Results also showed that providing non-capital resources has a direct effect on operational control in addition to its indirect effect through appointments to key executive positions.

Bargaining power and the trade-off between the ownership and control of international joint ventures in China

Abstract Equity ownership and operational control constitute two crucial elements in the design of the governance structure of international joint ventures (IJVs). Based on the bargaining power theory, this study proposes that discrepancies between majority ownership and dominant control may exist as a consequence of bilateral bargaining, which is attributable to the influence of both contextual and resource content variables. Based on a survey database containing over 700 IJVs in China, our empirical findings illustrate contingencies under which equity share and dominance of control may reveal a trade-off relationship. The foreign partner will be more likely to secure a position of dominant control by accepting ownership concessions when it is at the upstream stage of the IJV, which is characterized by a high dependence on foreign input. Furthermore, while intangible resources furnished by the foreign parent exert positive impacts on the foreign partner’s attainment of dominant operational control in general, the foreign partner’s supply of product related knowledge and marketing expertise is particularly capable of rendering it bargaining power in managing the trade-off between ownership and control whenever necessary. These findings may suggest foreign firms adopt a flexible mindset in their negotiations with potential local counterparts in order to achieve collaborative goals.

An Investigation of Control and Performance in U.S.-Chinese Joint Ventures

ABSTRACT This study took an integrated approach to managerial control in international joint ventures (IJVs). The various control mechanisms used in U.S.-Chinese joint ventures were examined. The linkage between control and performance was empirically tested using a sample of U.S.-Chinese joint ventures established in China during the period of 1979–1989. The findings support the hypothesis that effective managerial control exercised by the U.S. partner over the joint venture operation is positively related to its performance. U.S.-dominant joint ventures significantly outperformed Chinese-dominant joint ventures, but no significant performance differences were found between U.S.-dominant joint ventures and shared management joint ventures.

Control and Performance in International Joint Ventures

The authors examine the meaning of control in international joint ventures (IJVs) and the relationships of potential means of control in such organizations to the performance satisfaction of the foreign partner. They propose a conceptual model that provides both a traditional ownership-focused internalization perspective on those issues and an integrated approach combining a broader transaction cost interpretation of control with a resource input-based bargaining power model. A set of simultaneous structural equations with endogenous explanatory variables provides multiple possible paths from various resource and power inputs through different means of control to perceived performance satisfaction. In such a model, intermediate variables act both as dependent and independent variables; thus the complex theoretical interactions of the variables are modeled more comprehensively and realistically than in single-equation models. To test the model and compare the theoretical relationships, the authors used data from a survey of managers in Norwegian multinational firms having at least one IJV. For structural equation modeling with latent variables, they used the LISREL VII program that simultaneously fits the measured variables to the latent variables and provides a maximum likelihood solution for the structural equation system. The results clearly reject the traditional internalization approach to IJV governance that relies strictly on ownership share to delineate degree of control. However, relative resource input has a strong relationship to relative bargaining of the parent companies, which then drives equity share, control over specific activities, and perceptions of overall control of the IJV. That result supports a bargaining-power-based model of IJV control. The relatedness of the strategic resources of the parent and the joint venture also drives specific control, implying that although transaction risk is important to governance, governance is provided by specific control rather than ownership level. Perceptions of performance are strongly and positively related to overall control. Those results suggest that specialized control provides both protection and exploitation of key resource inputs and is gained through increased bargaining power. Higher levels of specific control result in a perception of overall control and thereby satisfaction with perceived levels of IJV performance among foreign parent company managers. Interestingly, traditional exogenous determinants of IJV control and performance such as government mandates, cultural similarity, and international experience levels fail to provide significant effects. Rather, the focus is on endogenous aspects of the parent-IJV relationship, suggesting that the key to parent firm satisfaction with an IJV is control over operations that use key strategic inputs from the parent.