Joint Venture Formation Research Articles

The Effectiveness of Policyholder Protection in AJB Bumiputera 1992 Medan

This study was motivated by a significant increase in the number of complaints against the insurance industry, especially cases of claim default in 2018-2022. The purpose of the study was to measure and analyze the effectiveness of policyholder protection at AJB Bumiputera 1912 Medan through a regulatory effectiveness approach as variable x is the legal factor itself, law enforcement factors, facilities or facilities, community factors, and cultural factors. The research method is descriptive quantitative. Primary data was obtained from questionnaires and interviews. While secondary data is in the form of documentation studies, in the form of Articles of Association, general conditions of the policy, and laws and regulations that support the research. The results of the study on respondents’ responses show that all indicators of factors affecting the achievement of regulatory effectiveness have a fairly high percentage. However, it should be noted that the factors that produce ineffective percentages are 62.45% for law enforcement factors and 60.14% for community factors. Both factors are caused by the late presence of laws that clearly regulate the form of joint ventures, No. 4 of 2023 concerning Development and Strengthening of the Financial Sector (P2SK), where it is stated in article 53 paragraph 2e: “distribution of profits and losses on Joint Venture activities for members”.

What affects parent companies’ innovation more in joint venture relationships?

Forming joint ventures with potential partners in acquiring the needed resources and technology provides benefits and creates competitive advantage and innovation for multinational enterprises. While cooperative partners can provide JVs with various resources and technologies, allocation of the position of organizational resources remains unclear and needs to be further addressed. The main purpose of the current paper is to emphasize organizational slack resources (e.g., available slack and potential slack) to illuminate the settings that facilitate the effects of investment attractiveness and employee involvement on JV innovation performance. To demonstrate the real industry of JVs and examine the research purpose, we used various databases, including the National Bureau of Economic Research U.S. patent data file, Harvard DVN patent database, Compustat database and SDC global joint ventures databank to examine the hypotheses. The results show the positive and significant direct effects of investment attractiveness and employee involvement on JV innovation performance. Additionally, the findings demonstrated that the above direct effects are more pronounced when there is higher available slack and potential slack. The current study contributes by offering new viewpoints on JV, offering new understandings of organizational slack and developing an uncharted bridge between the types of slack and JV innovation studies.

Targeted Liberalization: China's foreign investment regulation reform and its post‐WTO‐accession export surge

AbstractTo gain membership in the World Trade Organization (WTO) in 2001, China substantially modified its regulation of foreign direct investment. These reforms coincided with rapid changes in the composition of capital inflows, as the dominant entry mode shifted from joint venture to wholly foreign owned affiliate. Foreign‐invested enterprises contributed a rising share of China's rapidly growing exports. We investigate how much China's foreign ownership liberalization contributed to these observed trends in foreign investment flows and Chinese exports. Accounting for both the set of activities from which it removed foreign equity caps and those into which it newly encouraged investment, we estimate the impact of China's reforms on firm entry and exports using a difference‐in‐differences estimator. To eliminate bias resulting from heterogeneous and dynamic treatment effects, we also apply novel dynamic difference‐in‐differences estimators. We find that removal of foreign equity caps induced entry of wholly foreign owned firms, while having no significant effect on entry of new joint ventures. Concurrently, the designation of new activities for investment incentives induced foreign entry, particularly in the form of joint ventures. Reduced‐form calculations imply that FDI policy changes explain almost 9% of the increase in exports from foreign‐invested firms over the decade studied. The effect was larger in sectors identified as “high‐tech industries” by the Chinese government, as they contribute most of the estimated policy‐driven export growth from foreign‐invested firms. Thus, China's FDI regulation reform following WTO entry was targeted liberalization: elimination of equity share limits induced new foreign entry, while investment incentives encouraged formation of joint ventures.

Proximity and Knowledge Spillovers: Evidence from the Introduction of New Airline Routes

This paper examines the causal relationship between proximity and knowledge diffusion by estimating the elasticity of core-based statistical area (CBSA) pair-level citations to variations in travel time induced by the introduction of new flight routes. The findings reveal that decreasing travel time between U.S. cities by 20% increases knowledge flow by 0.5%, which corresponds to an increase of over 15,000 citations at the aggregate level. Rather than boosting within-firm knowledge transfer, travel time reduction leads to a rise in knowledge spillovers primarily across firm boundaries, particularly among those that form joint ventures, have block holdings in each other, or form supply chain relationships. These effects are stronger among city pairs located farther away from each other, with higher absorptive capacity, in complex technology classes, and for newly developed technologies. Additional mechanism tests suggest that the most likely channel through which travel time reduction impacts knowledge spillover is by influencing the transfer of tacit knowledge via facilitating cross-CBSA inventor flow and information acquisition. This paper was accepted by Tomasz Piskorski, finance. Funding: S. Zhou receives support from the National Natural Science Foundation of China [Grant 71804155] and China Fundamental Research Funds for the Central Universities [Grant 20720181047]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.01717 .

Effects of Stakeholder’s Management in Public Private Partnership on Implementation of Affordable Housing Projects in Meru County, Kenya

More than half of the world's population of over six billion people reside in urban areas, placing increasing responsibility on governments to provide fundamental human necessities, including housing. This challenge is particularly pronounced in Kenya, where many County Government PPP affordable housing initiatives have either failed or been stalled. Both National and County Governments have experienced difficulties in executing these projects, reflecting the nascent stage of PPP application in many underprivileged countries. In Meru County, the Affordable Housing Project (AHP) employs PPP, primarily in the form of joint ventures. This approach distinguishes it from other existing projects and generates a knowledge gap regarding the assessment of the impact of public-private partnerships on the implementation of affordable housing initiatives in this region. The aim of this research was to explore the effects of stakeholder’s management in public private partnership on implementation of affordable housing projects in Meru County, Kenya. Guided by stakeholder theory, the study employed a descriptive research design, collecting data through a structured questionnaire. A proportionate stratified random sampling method was used to select the study sample from County officials, non-governmental organization managers, development partners' managers, and household heads from selected study areas where the projects have been initiated, notably in the Buri, Maweni, Mjini, and Makandara wards. A total of 395 questionnaires were issued to the sampled respondents from a total target of 31978 who included the stakeholders in affordable housing project estates in Meru County that included county official managers in DoLPH (15), NGO’s managers (25), development partners’ managers (5) engaged in affordable housing and household heads (350). The collected data was analyzed and results presented in tables and figures, the qualitative information was presented in prose.

National Resource Control in Latin America: Shifting Dynamics of Lithium and Mineral Reserves amidst Rising Commodity Prices

Latin America has become a prominent producer of lithium, a crucial metal for electric vehicle batteries and clean energy technologies. The region possesses a significant share of the world’s lithium reserves, attracting attention from global stakeholders. However, governments in Latin America are asserting greater control over the mineral’s industry. Chile plans to establish a state-owned enterprise for lithium production, potentially requiring private companies to form joint ventures with the government. Argentina, Bolivia, Brazil, and Chile are engaged in discussions regarding the creation of a lithium OPEC-like organization aimed at controlling global prices. Bolivia already exercises near-complete control over its lithium industry. These developments reflect a trend of increased government control over strategic mineral resources with implications for the global supply chain of lithium and clean energy transitions.

Spatial analysis and optimization of self-pickup points of a new retail model in the Post-Epidemic Era: the case of Community-Group-Buying in Xi’an City

The Community-Group-Buying Points (CGBPs) flourished during COVID-19, safeguarding the daily lives of community residents in community lockdowns, and continuing to serve as a popular daily shopping channel in the Post-Epidemic Era with its advantages of low price, convenience and neighborhood trust. These CGBPs are allocated on location preferences however spatial distribution is not equal. Therefore, in this study, we used point of interest (POI) data of 2,433 CGBPs to analyze spatial distribution, operation mode and accessibility of CGBPs in Xi’an city, China as well as proposed the location optimization model. The results showed that the CGBPs were spatially distributed as clusters at α = 0.01 (Moran’s I = 0.44). The CGBPs operation mode was divided into preparation, marketing, transportation, and self-pickup. Further CGBPs were mainly operating in the form of joint ventures, and the relying targets presented the characteristic of ‘convenience store-based and multi-type coexistence’. Influenced by urban planning, land use, and cultural relics protection regulations, they showed an elliptic distribution pattern with a small oblateness, and the density showed a low–high-low circular distribution pattern from the Palace of Tang Dynasty outwards. Furthermore, the number of communities, population density, GDP, and housing type were important driving factors of the spatial pattern of CGBPs. Finally, to maximize attendance, it was suggested to add 248 new CGBPs, retain 394 existing CGBPs, and replace the remaining CGBPs with farmers’ markets, mobile vendors, and supermarkets. The findings of this study would be beneficial to CGB companies in increasing the efficiency of self-pick-up facilities, to city planners in improving urban community-life cycle planning, and to policymakers in formulating relevant policies to balance the interests of stakeholders: CGB enterprises, residents, and vendors.

International joint ventures, shareholder returns, venture complexity, and political risk

AbstractThis study investigates the formation of international joint ventures into emerging markets and the corresponding implications to shareholder wealth. Empirical evidence from this study reveals that formation of international joint ventures into emerging markets are value enhancing for shareholders. The formation of international joint ventures increases firm value by more than 1%, on average. This study also investigates two important factors for their influence on the market's assessment of the joint venture formation—the complexity of the joint venture and the political risk of the host country. Evidence in this study reveals that less complex ventures into emerging markets reap significantly greater shareholder wealth effects relative to more complex ventures. Evidence also reveals that shareholders receive a risk premium for accepting greater political risk. In addition to understanding the ramifications of international joint venture formation, this study has relevance for managers' site selection decisions when considering venture complexity and the political risk of emerging markets.

Managerial Incentives and the Valuation of International Joint Venture Formation

Strategic management decisions and actions involving international joint venture formations are significant to many firms and have major economic consequences. Previous empirical evidence on the effects of joint venture formation announcements on shareholder wealth reveals that firm value is more often positively impacted. However, many previous analyses of shareholder wealth from joint venture formations do not fully explore cross-sectional differences in managerial incentives to pursue these international investments. The primary purpose of this study is to exploit these cross-sectional differences using agency theory to explain managerial behavior and subsequent shareholder effects. This study capitalizes on agency theory’s notion that managers are not necessarily motivated solely by the maximization of firm value, but instead are interested in maximizing their own utility. The study’s findings are consistent with agency theoretic hypotheses based on a broad cross-section of international joint ventures. Results demonstrate that shareholder returns to international joint venture formation exhibit considerable variability and, importantly, are at least partially explained by cross-sectional differences in agency incentives. Specifically, returns to shareholders are positively related to the level of managerial ownership and inversely related to the level of free cash flow. Moreover, a positive relation is found between shareholder returns and the joint interaction between leverage and free cash flow. These findings indicate that the effect of international joint venture formation on shareholder value is not uniform and, more importantly is at least partly influenced by managers’ agency incentives.

An Empirically Grounded Framework of Contextualized International Joint Venture Formation Processes

An Empirically Grounded Framework of Contextualized International Joint Venture Formation Processes

Network formation and systemic risk

This paper introduces a model of endogenous network formation and systemic risk. In it, firms form joint ventures called ‘links’ which are subsequently subjected to either good or bad shocks. Bad shocks incentivize default. Links yield full benefits only if the counter-party does not subsequently default on the project. Accordingly, defaults triggered by bad shocks render firms insolvent and defaults propagate via links. The model yields three insights. First, stable networks with ex-ante identical agents exhibit a core–periphery structure. Second, an increase in the probability of good shocks increases systemic risk. Third, because the network formed depends on the correlation between shocks to links, an observer who misconceives the correlation will underestimate the probability of system-wide default by a factor of a half.

The Financial Buzz Word - Bancassurance

Banks are engaged in their core business of accepting deposits and lending loans, their activities are regulated and restricted by RBI. Bank's core activities are also not so profitable; hence, their bottom-line is shrinking. Thus, they have to think of other activities and sources of income. Bancassurance is the buzzword in the current financial service market, where the banks are forming joint ventures with insurance companies, to encash the wide customer database and the everlasting trust. The insurance companies get sufficient business and premiums through the collaboration, enhancing their presence and market share. On the other hand, the banks are earning handsome commission income. Today, banks are having more than 50% other income in their balance sheet, by selling insurance, mutual funds, pension plans and unit-linked products. Bancassurance has gained so much momentum that almost all the banks have joined hands with one or the other life and non-life insurance company. Some banks have even adopted organic growth mode by starting their own insurance business like SBI life. Insurance is a service industry; it is there to serve the changing needs of the customers. Insurance is a matter of solicitation and needs a push strategy by the seller to convince the customers. The bank customers are not fully aware of their insurance cover requirements. To make both ends meet and for the mutual co-existence, bancassurance is the answer, to provide tailor-made and customized products for the mutual benefits of customers, insurer and the bank. It has also created a huge wave of recruitment not only for management professionals but also at every level.

Investigating critical risk factors of selecting joint venture contractors for infrastructure projects implementation in Vietnam

The purpose of this paper is to investigate the major risks of joint venture contractor selection for infrastructure project implementation in Vietnam, and to explore the relationship between risk factors used for risk ranking and mitigation. From a literature review, together with expert group discussion, a list of potential risk factors was identified and used for questionnaire survey design. In this study, 100 survey responses were received from professional practitioners in Vietnam used to investigate their perceptions regarding the probability of risk occurrence and the severity of risk impacts on contractor joint venture selection. Factor analysis was performed based on a total of 32 main risk factors identified. Results reveal that seven main risk factors were extracted as follows: financial and economic risk, professional competence risk, joint venture organizational risk, joint venture legal risk, construction implementation collaboration risk, natural environment impact and pandemic risk, and construction site supervision risk. This study enables us to understand latent risk from a practitioner’s viewpoint. The findings of this study are beneficial for both the construction contractors involved in the joint venture form and the decision-makers who establish contractor selection strategies for complicated infrastructure projects in the context of developing countries.

Prospects of Joint Venture in Local Road Bridge Construction of Nepal

Purpose: The trend of forming a Joint Venture (JV) to enter into the bidding procedure is high in local road bridge construction (LRBC) in Nepal. As we know that the construction industry is complex, firms are facing a new type of problem in every next project. In such an unpredictable working environment working jointly with different firms is a challenge. So, this study was carried out to analyze the prospects of JV in LRBC in Nepal. Design/Methodology/Approach: The study covers the bridges which are built by DoLIDAR under different projects. Various data collection tools were used for the study. Primary data were collected from a questionnaire survey, sample bridges of DoLIDAR, field observations, and focus group discussions. Secondary data were collected from reports, journals of previous studies, and trends of JV formation in international constructions. Strength Weakness Opportunity and Threat (SWOT) analysis based on a questionnaire survey was also carried out. Findings/Result: It was also found that to fulfill the gap between the documentation and implementation of JV, a policy is required. As the client's intention for provision of JV is the actual requirement of the project, no to change the scope and scale of contractors so, JV must be formed and followed as per the requirement of the project. Joint ventures should make a detailed agreement among themselves clarifying the roles and responsibilities of each partner, usage of the resources, and the implementation of the project. For the proper management of JV, a management committee should be formed which shall manage the working team and resources suitably as per the requirement for the project. The presence of at least one partner from each partner in every meeting should be made mandatory by the client. A separate policy should be formulated focusing on detailed agreement clause, institutional arrangement for better functioning of JV. The database system of active contractors should be maintained by MoPIT which shall be used as a major tool while evaluating as well as awarding contracts. Originality/Value: The scope of this study is to identify the practice and prospects of JV's in LRBC. It addresses the understanding of clients and contractors about the JV. The study area covers the bridges built by DoLIDAR funded by GoN, SDC, World Bank (WB), Asian Development Bank (ADB), etc. The study includes local bridges built in DRCN roads covering the Himalayan region, mountain region, and Terai region. The study outcome is significant for the construction stakeholder to overcome the challenges of JV for taking the benefits of JV. The study is significant for policymakers for formulating policies to reduce the problems of JV. Paper Type: Action Research

Risks of joint venture formation in the South African construction industry

The global expansion of construction joint ventures (JVs) signifies the drive to proffer solutions to some of the challenges confronting the delivery of projects in the construction industry. However, irrespective of the potential benefits resulting from JV formation for construction project delivery, it is yet associated with risks that possess significant threats to the actualisation of enhanced and effective construction project management. Therefore, this study assessed the risks characterising the formation of JVs in the South African construction industry. Quantitative data was collected from construction professionals in Gauteng province of South Africa. Data analysis was carried out using a 4-stage process which included data reliability and validity, descriptive statistics, one sample t-test and exploratory factor analysis. Findings from the study indicated a 6-pronged cluster of risks associated with JV formation in the South African construction industry. The contribution made by the study to the body of knowledge is that the findings will help stakeholders in the construction industry to be fully equipped with the requisite knowledge of the inherent risks attributed to JV formation. Thus, providing a basis for how best the identified risks can be abated, mitigated or avoided.

International Taxation of Offshore Indirect Transfers of Mineral Assets: Legal Analysis Considering the Principle of Fairness and Sustainable Development

This article evaluates the current international tax regime that is applicable to gains on offshore indirect transfers (OITs) in the mineral industries against the concepts of fairness and sustainable development. It is first argued from a legal perspective that these two concepts encompass the principles of equality and legal certainty. Article 13(4) of the OECD (Organization for Co-operation and Development) and UN Model Tax Treaties and Article 9 of the Base Erosion and Profit Shift (BEPS) Multilateral Instrument for tax treaties are subsequently analysed to determine to what extent these provisions contribute to supporting tax equality among businesses and between countries as well as promoting legal certainty for both the taxpayers and tax authorities. It was determined that the structuration of mining operations in the form of joint ventures may pose particular challenges, including difficulties in valuing mineral assets or determining the sources from which interests derive value. In this respect, the inclusion of certain exceptions in Article 13(4) of tax treaties is proposed. One such instance could be the exclusion of the scope of the provision of gains made by alienators that hold a certain level of participation. The authors conclude that each country should determine whether to tax such capital gains, taking into account its own specificities and examining the tax system in its entirely. However, the current tax regime is a positive step forward towards fairer taxation and contributes to the fulfilment of specific sustainable development goals (SDGs), at least from the perspective of developing countries. Fairness, legal certainty, tax equality, offshore indirect transfer, sustainable development, tax avoidance, mineral industries, developing countries

The roles and strategies of ASEAN in the Belt and Road Initiative (BRI)

Under the Belt and Road Initiative (BRI), China focuses on the ASEAN as part of land bridge connecting China to Southeast Asia, the Indian Ocean, and the China-Indochina Peninsula Corridor sea route that is the comprehensive sea route between China, South China Sea, Indian Ocean, and Europe. On the other hand, ASEAN member nations regard the BRI as an avenue to improve connectivity with their poor infrastructure development which will generate trade and investment increase in the region particularly through improved logistics. Accordingly, ASEAN member nations are keen to develop their infrastructure projects in collaboration with Chinese companies and funding agencies mainly in the forms of joint venture. The Asian Development Bank (ADB) estimates that the total infrastructure investment needs in the ASEAN from 2016 to 2030 will be between USD 2.8 trillion with baseline estimate to USD 3.1 trillion with climate adjusted estimate. This paper aims to argue how China and the ASEAN can be interacted by the BRI and what are impacts of the BRI on the region. Furthermore, it analyzes which roles do the BRI play in building the region between China and the ASEAN member nations. Last, but not least, it also focuses on Chinese national strategy how to implement the BRI in the region.
 Received: 25 August 2021Accepted: 18 November 2021

Accountability answers company insurance life based investing against the risk of failure to pay for policyholders

The problem of this research is how to regulate investment-based life insurance in Indonesia and the liability of investment-based life insurance companies against the risk of default by policyholders. This study uses a research method that has an empirical juridical type. The study results explain that the regulation of investment-based life insurance in Indonesia is regulated in Law Number 40 of 2014 concerning Business Per Insurance, OJK Regulation Number 23/POJK.05/2015 concerning Insurance Products and Marketing and Decree of the Chairman of BPPM and Financial Institutions Number KEP-104/ BL/2006 concerning Investment-based life insurance products. PP Number 87 of 2019 concerning insurance companies in the form of joint ventures, RI's Financial Decree Number 422/KMK.06/2003 and Director General of Financial Institutions Decree Number 2475/LK concerning investment insurance products and forms of liability of default insurance companies must fulfill the contents of the agreement insurance that gives rise to the rights and obligations of the insured reciprocally. However, Law Number 40 of 2014 concerning Insurance Business does not fully regulate violations in the insurance business and does not regulate how the insurance company is responsible for the company's inability to fulfill insurance claims.

АНАЛІЗ ОСНОВНИХ ФАКТОРІВ, ЩО ВПЛИВАЮТЬ НА ФІНАНСОВІ РИЗИКИ ПІДПРИЄМСТВ В УМОВАХ ГЛОБАЛІЗАЦІЇ

The article considers the key factors that affect the financial risks of enterprises in the conditions of globalization. Given the rapid changes in the international business environment, the author analyzes the role of international competition, exchange rate fluctuations, economic, political, technological, environmental and socio-cultural changes. The main attention is paid to the relationship between these factors and their influence on the stability and competitiveness of enterprises. The importance of adaptation, strategic planning and innovative approach for effective risk management and use of new opportunities provided by the globalized market is emphasized. The study focuses on the importance of corporate social responsibility, ethics and environmental sensitivity in modern conditions of globalization. The author examines how businesses can use these aspects as strategic tools to enhance their reputation, strengthen relationships with consumers, and ensure long-term growth. The article also provides practical recommendations for enterprises seeking to optimize their activities and minimize potential risks in the face of globalization. In conclusion, the author emphasizes that only flexible, innovative and responsible enterprises will be able to succeed in a dynamic and unpredictable global economic landscape. In the context of the constant evolution of the global market, the article also considers the importance of continuous learning and development for enterprises. Adaptation to new technologies, understanding the cultural characteristics of different markets and the ability to quickly respond to changes become key competencies of a successful enterprise. The role of international cooperation and partnership in the conditions of globalization is determined. The formation of international alliances, joint ventures and strategic partnerships can help companies gain access to new markets, resources and technologies, as well as share risks. An important aspect is also emphasizing the role of leadership in managing the risks and challenges of globalization. Effective leadership based on strategic vision, empathy, and ethical principles can inspire teams to excel despite external challenges. In conclusion, the author urges enterprises to be ready for uncertainty, accept challenges as opportunities and strive for continuous development and improvement. Only such an approach will allow enterprises not only to survive, but also to prosper in the conditions of a globalized world.

A Complementary Set for Growth: Interest Free Market and Philanthropy

This theoretical research highlights the effects of interest and realizes the Interest-free market and philanthropy as a solution to its adverse impact on the economy and society. Interest is always well-thought-out as a vice in all the earliest and existing religions. Authors try to explain that in spite of the adversarial effects of interest, its role is significant in the business transaction in the global world. The study concludes that interest is immoral and unrealistic, and Islam has given the solution in the form of joint ventures, and its investment modes are Mudharabah or Musharakah. In this way, the welfare of an individual and the social welfare of society can be achieved.