International Joint Ventures Partners Research Articles

Political uncertainty and revenue sharing in international contracting

This study investigates a critical source of political uncertainty for foreign investors in a centralised political system: leadership turnover within local governments. Our stylised model suggests that risk-averse foreign investors, faced with this uncertainty, tend to offer a larger revenue share to their local partners in international joint ventures (IJVs). This incentivises local officials to provide the necessary authorisations and public inputs for IJVs. Using a unique Chinese dataset that links city-level leadership changes with firm-level incentive structures, our empirical analysis provides robust evidence supporting this framework.

Implementing global corporate social responsibility locally: the example of multinational enterprises and international joint ventures in Myanmar

ABSTRACT Corporate social responsibility (CSR) has become an ever more important and increasingly high profile, visible and commented on part of business operations. This is especially so for multinational enterprises (MNEs) seeking practice adherence to global CSR policy when operating international joint ventures (IJVs). In this context we look at the example of land grabbing, a pervasive commercial norm across parts of Asia. It is essential to understand both the sources and mechanics of this practice as well as its costs. To date, however, knowledge remains limited to depictions of ‘exploitative’ Western MNEs, with little accounting for the key moderating influence of local stakeholders. The role and practices of local partners in IJVs has been largely ignored. Addressing this we extend our knowledge of MNE engagement through understanding the domestic partner’s land grabbing practices in an in-depth study of IJVs in Myanmar. Juxtaposing this data with our own experiential data from across emerging South East Asia, we develop a typology of land grabbing engagement comprising ‘obliviousness’, ‘passive collusion’, ‘blind-eye facilitation’ and ‘on-brand’ engagement. Implications for how we understand the management of MNE ‘foreignness’ at the intersection of CSR implementation, IJV management and corporate reputation protection in emerging Asia Pacific countries, are then presented.

Developing structural modelling of inter-partner factors of international joint ventures performance

PurposeThe study aims to identify, analyse and develop a model for measuring the inter-relationship and interaction among the inter-partner factors. International joint ventures (IJVs) literature has scantly studied the interactions and inter-relationships among the inter-partner factors of IJVs performance. To address this gap, this research creates a hierarchical relationship framework among the inter-partner factors of IJVs performance.Design/methodology/approachThe comprehensive literature review is used to identify the factors and possible relationships between the factors and IJVs performance. M-TISM (modified total interpretive structural modelling) methodology is used to examine the relationship among the factors of IJVs performance.FindingsThis study highlights 12 inter-partner factors that affect IJVs performance. The results suggest that size asymmetry, commitment, goal incongruency, competitive overlap, trust, control, the interdependency of resources, cooperation, economic distance, cultural distance, geographical distance and administrative distance significantly impact IJVs performance. Commitment is found to be a linkage variable as it has high dependence and driving power. Goal incongruency and competitive overlap have high driving power.Research limitations/implicationsThis study gives a proposed list of critical inter-partner factors for policymakers and practitioners to consider when developing rules or recommendations to improve IJVs performance. The focus of policymakers should be on economic and geographical distance, followed by cultural distance, competitive overlap, goal incongruency, size asymmetry and administrative distance to improve inter-relationship among the partners in IJVs. The work contributes to the academician by presenting a modified TISM model that highlights the significance of ambidexterity in driving the performance of IJVs.Originality/valueThis study fills a gap in the literature by analysing the interactions among the inter-partner parameters that influence the performance of IJVs. It offers insights into the variables, such as driver dependence and the relationships between the variables.

Environmental spillovers in international joint ventures: Evidence from Chinese industrial firms

Investing in international joint ventures (IJVs) is an important way for Chinese investors to establish partnerships with foreign investors. However, the environmental spillovers in this process have yet to be evaluated in the existing literature. Employing firm-level data with nearly 410,000 observations of Chinese industrial firms from 1999 to 2009, this paper constructs a quasi-natural experiment to analyze the effects of transitioning from being non-IJV partners to IJV partners on firm-level pollution emissions. A difference-in-differences model is used to alleviate potential endogeneity problems. Our results indicate that becoming an IJV partner reduces a firm's pollution emissions. The mechanism analysis suggests that knowledge spillovers, the increase in clean fuel usage, and the decline in pollution emission intensity could lead to a pollution reduction effect, while the expansion of industrial output could also increase pollution emissions. The heterogeneity analysis shows that the absorptive capacity of technology, ownership, the level of industrial pollution, and regional resource density influence the effect of environmental spillovers in IJVs.

Institutional determinants of IJV partner choice in Europe: a host-country, a home-country or a third-country partner?

PurposeThis study aims to examine the international joint venture (IJV) partnership strategy in Europe from an institutional perspective. A firm operating in a foreign country via an IJV can partner with a local firm from the host country, a firm from the same home country or a firm from a third country. This study takes the first step in examining the determinants of these partner choices.Design/methodology/approachThis study tests hypotheses based on a data set of 637 IJVs in Europe.FindingsForeign firms are less likely to operate in a partnership with a firm from the home country or from a third country (compared to operate in a partnership with a local firm) when the host country institutions are weaker or institutional distance is larger. Also, foreign firms’ disinclination to operate in a partnership with a firm from the home/third country when the host country institutions are weaker or institutional distance is larger will diminish with greater host-country experience.Practical implicationsThis study provides important insights for firms for evaluating partner choice and potential collaborations in the European region with heterogenous institutions.Originality/valueThe partner choice among the above three forms has been neglected in the literature. This study first conceptualized that the institutional profile of the host country and institutional distance between the host country and the home country can determine the partner choice.

Happily (N)ever after: An empirical examination of the termination of IJVs across emerging versus developed markets

Research on international joint ventures (IJVs) has paid increasing attention to the context of emerging markets (EMs). While the intersection of the IJV and EM research streams has grown, it has overlooked the effects of the partner firm home country and IJV host country context on the IJV outcome. In this study, we develop a typology of IJVs based on home and host countries as either developed or emerging markets to address this gap. Using a dataset of 24,011 IJVs in 48 countries between 1995 and 2017, we examine the impact of partners’ home countries, the IJV host country, and their interactions on the likelihood of IJV termination. Our findings reveal that beyond the frequently examined partner-, IJV-, and host country-related factors in prior research, the context of IJV partners’ home countries, the IJV host country, and their interactions significantly matter for IJV termination.

Determinants of Coopetition Relationships in International Joint Ventures for High-Speed Rail Projects

The mileage of high-speed rail (HSR) is expected to grow in the foreseeable future. Fierce international competition and HSR business uniqueness have facilitated the broad application of international joint ventures (IJVs) globally. However, the interaction between competition and cooperation complicates IJVs, and IJVs partners' implementation has rarely been informed concerning the fluent operation of IJVs for HSR projects. This study aims to examine the determinants of IJVs coopetition for HSR projects. We identified 35 variables along with their clusters through literature review and pilot study, and collected data from the international HSR industry using a questionnaire survey. Eight clusters verified by the confirmatory factor analysis come from three levels: macro-level, project-level, and firm-level. Based on the partial least squares structural equation modeling (PLS-SEM), a path model for the coopetition relationship has been established, demonstrating that macro-level and project-level determinants affect the coopetition relationship via the firm-level determinants. Furthermore, the path model indicates recommendations corresponding to various situations (isolating situation, partnering situation, contending situation, and adapting situation) for IJVs members to find a way to improve the coopetition relationship. Thus, this study not only contributes to the existing knowledge body on coopetition theory, but also enhances HSR contractors' comprehension of the coopetition relationship determinants as well as the interactions.

IJV partner relations in emerging markets: the importance of Greek partner's prior IJV experience

PurposeThe purpose of this study is to examine the effect of the Greek partners' prior international joint venture (IJV) experience on partner compatibility, knowledge transfer (KT) and trust in their IJVs.Design/methodology/approachThe authors conducted a primary research study and collected a total of 50 useable questionnaires from Greek firms with IJV participation.FindingsThe findings show a positive effect of the Greek partner's prior experience in IJV establishment and management on partner compatibility and on successful KT to the IJV.Practical implicationsThe results are significant for executives of firms who seek to expand to international markets through IJV formation and for practitioners involved in IJVs, regarding prior IJV experience, partner compatibility and KT to their IJVs.Originality/valueThis study uses a sample of Greek firms with IJV participation to examine the effect of their prior IJV experience on IJV partner relations in the region of South East (SE) Europe. Additionally, it enhances the understanding of the effect of prior experience in the IJV establishment and management in emerging markets and sheds light to the antecedents of partner compatibility, which have been neglected by researchers.

Resource complementarity, partner differences, and international joint venture performance

In emerging markets, multinational enterprises use international joint ventures (IJVs) to acquire and integrate partners’ complementary resources and improve their competitive positioning. While resource complementarity facilitates mutual learning and synergy creation, various factors can undermine knowledge-sharing and partner relationships, thereby inhibiting the value-realization potential of complementary resources during the post-partnership-formation stage. Drawing on the relational view, this study investigates how IJV partner differences influence the benefits extracted from resource complementarity. Based on a sample of 200 IJVs in China, we find that cultural distance and control asymmetry between partners negatively moderate the positive impact of resource complementarity on IJV performance. Partner market overlap has an inverted U-shaped moderation effect on the impact of resource complementarity. These results offer novel insights into the contingencies affecting the realization of the value of complementary resources in IJVs.

Effects of Emerging-Economy Firms’ Knowledge Acquisition from an Advanced International Joint Venture Partner on Their Financial Performance Based on the Open Innovation Perspective

Although emerging-economy firms (E-E firms) must have a keen interest in improving their performance by utilizing knowledge transferred from their advanced international joint venture (IJV) partner, there has been little research on the performance implications of E-E firms’ knowledge transferred from their advanced IJV partner. So, drawing on open innovation and organizational learning perspectives, we examine whether, how, and when E-E firms’ knowledge acquisition from their IJV partner has a positive impact on their financial performance. Based on data collected from 127 Thai manufacturing firms with a local IJV partnered with an advanced overseas firm, our results reveal that E-E firms’ knowledge acquisition from their IJV partner has an overall positive influence on their financial performance in terms of growth and profitability. Our results further show that innovation performance mediates the relationship between E-E firms’ knowledge acquisition and their financial performance based on a moderated mediation analysis including innovation performance as a mediator and absorptive capacity as a moderator. It is also found that the positive mediation effect of innovation performance is more pronounced in the presence of higher absorptive capacity than otherwise. That is, our results show that even among E-E firms which have acquired much knowledge from their IJV partner, those with higher absorptive capacity achieve better innovation performance than those with lower absorptive capacity, and improved innovation performance subsequently contributes to producing superior financial performance. The key conclusions, implications, and limitations of our study are presented based on these findings.

Managing international joint ventures to improve performance: The role of structural and social mechanisms

Poor performance has been a major concern in research on international joint ventures (IJVs). This study integrates the IJV management mechanisms from transaction cost theory (TCT) and social exchange theory (SET) in order to gain insights into management mechanisms that improve IJV performance. The framework consists of three structural (i.e., symmetric dependence, symmetric equity share and resource complementarity) and three social (i.e., trust, communication and cultural adaptation) IJV management mechanisms, which are considered as potential determinants of IJV performance. Based on the analysis of data collected from 89 IJVs established by Nordic firms in Asia, Europe and the USA, results indicate that TCT-based symmetric dependence and resource complementarity on the one hand and SET-based trust, communication and cultural adaptation on another significantly improve IJV performance. However, impact of symmetric equity share on IJV performance remains negative and non-significant, explaining that IJV partners may consider it rather a safeguard to their own stake and interests in IJVs. In addition, SET-based IJV management mechanisms are found to be more effective than the TCT-based IJV mechanisms in improving IJV performance.

Impacts of National Congruence and Incongruence on International Joint Venture Completion

How do repeated ties influence the international joint venture (IJV) completion? We address this question by considering the joint influences of repeated ties held by foreign and local firms and incongruence/congruence between countries. Repeated ties have been often viewed as an advantage of JV partners, which may help complete the announced IJV deal by the same partners. We argue that the impact of repeated ties on IJV completion depends on whether it meets or violates expectations held by the host atmosphere. Specifically, drawing on expectancy violations theory, we argue that repeated ties as past fulfilment of expectations by IJV partners increase the likelihood of announced IJV deal completion because past collaborations bring partners into a psychological contract with each other that aligns their expectations for future collaboration. However, such advantage of repeated ties may turn to be a liability when partners’ home and host countries experience animosity caused by military conflicts and communication barriers resulting from different languages. Using a sample of announced IJV deals in a global setting, we find supportive evidence of our theoretical predictions.

Race to learn: knowledge characteristics and resource structure

PurposeThis paper aims to study the impact of the interactive effect of knowledge characteristics – tacitness, specificity and availability – and resource structure – complementarily and asymmetric – on learning race behavior among international joint venture (IJV) partners in China.Design/methodology/approachPreliminary in-depth interviews with three IJV managers were conducted to develop and evaluate the tentatively developed questionnaire. The finalized survey questionnaire was distributed to middle and top-level managers of IJVs, resulting in a total of 124 usable surveys. The psychometric properties of data were evaluated using Cronbach’s alpha and confirmatory factor analysis and hypotheses were tested using a generalized linear model.FindingsThe results show that partners in IJV have low tendencies to acquire tacit and specific knowledge, but, when the resource is complementary, it stimulates the learning race. Also, when resources are asymmetric, IJV partners engage in the learning race more aggressively, particularly for highly specific knowledge. The situation reverses for highly available knowledge.Originality/valueThe findings provide important insights for both researchers and managers on knowledge characteristics and resource structure influencing learning race behavior. This insight allows firms to leverage features of knowledge and resource conditions to prevent or facilitate the learning race for either common or private interests.

From Formal Contracts to Relational Governance Function: Aggravated Conflicts in IJVs

There have hitherto been inconclusive findings pertinent to the causes of high failure rates of international joint ventures (IJVs). More intriguingly, even if IJV partners have had repeatedly sati...

Institutional differences and arbitration mechanisms in international joint ventures

Abstract Research summaryWe theoretically and empirically study the effects of legal institutions on the inclusion of arbitration provisions in international joint venture (IJV) contracts. Legal institutions offer a public trilateral forum to handle interpartner disputes. However, these institutions function differently across countries, which can impede IJV partners from resolving disputes effectively through court systems. Alternatively, partners can take advantage of private trilateral resolution mechanisms in the form of arbitration. We argue and demonstrate that differences among partners' home country legal institutions regarding the legal traditions, as well as the importance of procedures and costs imposed in these countries for enforcing contracts, increase the likelihood of choosing arbitration over litigation. We also compare results for partners' recourse to IJV boards as a private, bilateral means of addressing conflicts. Managerial summaryIJVs are powerful levers for market expansion and access to resources and capabilities. The risks of corrosive disputes caused by conflicting interests or misunderstandings among partners are nonetheless far from being negligible. Our study helps decision makers and managers increase their understanding of the options and remedies available for resolving disputes. We consider three mechanisms in particular: public courts, arbitration, and the board of directors. Findings show that considering the partners' home country legal environments but also the discrepancies between these environments is essential when it comes to giving preference to arbitration over public courts. Findings also suggest that decisions related to internal private ordering (i.e., relying on the JV board of directors) are driven by the exchange characteristics more than by institutional considerations.

Conditional effects of justice on instability in international joint ventures

Instability is inherent in international joint ventures (IJVs) and thus factors that can cause IJV instability have received substantial research attention. Unfortunately, no research has attempted to investigate the antecedent factors that facilitate joint learning between IJV partners, which can stabilize an IJV. Based on resource dependence theory, this research theorizes that resource composition can determine not just the formation of an IJV but also its strategic direction (i.e., long- or short-term view). Specifically, it is argued that IJV partners could integrate their complementary resources to reduce instability through conducting joint learning and creating new knowledge, and that the relationship between IJV partners could influence this process. To investigate how resource complementarity, distributive justice, and procedural justice can stabilize an IJV through joint learning by IJV partners, this study relies on the survey of 124 IJVs in China and uses process conditional modeling to test the hypothesized moderated mediation. The findings suggest that low distributive justice and high procedural justice offer the optimal combination for enhancing the positive stabilizing effects of resource complementarity in IJVs through inter-partner joint learning. Counterintuitively though, a high level of distributive justice may increase IJV instability, as it emphasizes outcome division and individual interests. Theoretical and managerial implications of the findings are discussed.

Global marketplace strategy and choice of interaction after termination of international joint venture

AbstractForeign partner's global marketplace strategy significantly influences the choice of interaction after international joint venture (IJV) termination as supplier–buyer, complement, or competitor between terminated IJV partners. The domestic partner in IJV enables foreign firms to pursue its global marketplace strategy—transnational, multidomestic, global, or international. On IJV termination, foreign partner's perceived value creation from IJV shall be rendered void and is required to either look for a new domestic firm to collaborate or form an interaction after IJV termination with IJV's domestic partner. This study examines the role of foreign firm's global marketplace strategy on the choice of interaction after IJV termination as supplier–buyer, complement, or competitor using data on terminated two partner IJV headquartered in India.

Post termination interaction in international joint ventures (IJV)

PurposeThis paper aims to explore dynamics of post termination interaction between international joint venture (IJV) partners and empirically examines IJV level and dyad level factors that influence the choice of post IJV termination interaction as supplier, complement or competitor.Design/methodology/approachIn-depth literature review is undertaken to identify IJV and dyad level that could influence the choice of post termination interaction between terminated IJV partners. Hypotheses are empirically validated using multinomial logistic regression on data collected on terminated IJV headquartered in India.FindingsThe results denote that the choice of post-IJV termination interaction between IJV partners as supplier, complement or competitor is influenced by interdependence, bargaining power, foreign partner’s purpose of IJV, complementarity and type of IJV termination.Research limitations/implicationsThis paper explores an under researched area in extant IJV literature that could be taken up for study by academicians. The paper upholds and strengthens the dynamic capabilities view of strategic management in IJV context.Practical implicationsThis paper examines a practice adopted by businesses in emerging markets and determines important factors that influence the choice of interaction post IJV termination between partners. Practitioners will be encouraged to understand and plan post termination dynamics with their terminated IJV partner.Originality/valueThe paper undertakes examination of a practical business phenomena, i.e. interaction post termination between terminated IJV partners.

A new way to look at an old problem: International joint venture partner selection via constrained systematic search

Although international joint ventures (IJVs) provide many benefits to multinational enterprises (MNEs), IJVs continue experiencing high dissolution rates; there is a pressing need to re-evaluate the partner selection process for IJVs. In this article, I utilize constrained systematic search (CSS) as the proposed process by which to improve the partner selection process and reduce IJV dissolution rates. CSS is a process MNEs can utilize to gain private information about potential IJV partners. The implementation of CSS can improve the success rates for an MNE entering an IJV in two ways: MNEs can more effectively identify (1) information withholding/misleading behavior of potential partners and (2) complementary resources in potential partners.

Disseminative capacity and knowledge acquisition from foreign partners in international joint ventures

We developed a theoretical model that examines the impacts of a foreign parent’s disseminative capacity on knowledge transfer to International Joint Ventures (IJVs). We tested our model with data from 199 IJVs in South Korea. We found empirical support for our arguments that the foreign parent firm’s codification and articulation ability, willingness to share knowledge, and frequent and effective use of communication channels determined the extent of knowledge acquisition by the local IJV partners.