International Joint Ventures Performance Research Articles

When to go it alone: Examining post-conversion performance of international joint ventures

This study examines the decision to convert international joint ventures to either foreign or local wholly owned entities and the subsequent impact on performance from the perspective of incomplete contract theory. With China’s relaxation of the joint venture requirement, foreign partners are more likely to take full control and thereby improve performance in provinces with fewer institutional barriers and industries with high intangible asset intensity, while local partners are more likely to do so in provinces with higher institutional barriers and low intangible asset intensity. Furthermore, the performance improvement is more salient when transitioning from foreign minority-local majority joint ventures.

The Effects of Psychic Distance and Inter-Partner Fit on the Performance of International Joint Ventures

The impact of psychic distance stimuli and inter-partner fit on the performance of international joint ventures (IJVs) has not been adequately explored in the case of emerging economies. Another lacuna in literature is the analysis of the performance of IJVs in regard to the new normal business landscape. This study analyses the impact of psychic distances stimuli and inter-partner fit on the performance of IJVs in the context of new normal business landscape. The secondary data of 122 IJVs headquartered in India with G7 nations is empirically tested. The study indicates that out of all psychic distances, administrative and economic distances significantly affect the performance of IJVs.

Is Ambidexterity Strategy Beneficial to International Joint Venture Performance

While previous studies highlight ambidexterity is critical for firms’ sustainable competitive advantage, whether IJVs can benefit from an ambidextrous strategy remains unknown. With a polynomial su...

Leveraging channel management capability for knowledge transfer in international joint ventures in an emerging market: A moderated mediation model

A central issue faced by an international joint venture (IJV) is how to manage and exploit knowledge learned from its foreign parents (i.e., knowledge transfer) for better IJV performance. Drawing from the resource –based view and the dynamic capabilities perspective, this study proposes a moderated mediation model in which channel management capability of an IJV helps transform the potential benefits of knowledge transfer into performance, and such indirect effect is augmented by absorptive capacity of an IJV and market dynamism it faces. Using a sample of 136 China-based IJVs, findings revealed that the mediation effect of channel management capability is particularly salient and becomes stronger when an IJV faces a more dynamic market environment or when the IJV has a relatively higher absorptive capacity. But the indirect effect becomes negative when the IJV has low absorptive capacity.

국제합작기업 파트너 특성, 제휴몰입도, 그리고 합작기업성과의 관계에 대한 연구: 중국 소재 국제합작기업을 중심으로

국제합작기업 파트너 특성, 제휴몰입도, 그리고 합작기업성과의 관계에 대한 연구: 중국 소재 국제합작기업을 중심으로

Interactive effects of information exchange, relationship capital and environmental uncertainty on international joint venture (IJV) performance: An emerging markets perspective

Prior research on the role of international joint ventures (IJV) in the emerging markets generally ignores the impact of information exchange on IJV performance as well as the mediating role of relationship capital (a key measure of competitive dynamics and co-evolution) and the moderating impact of environmental uncertainty in this process. This paper addresses these important research gaps by exploring the direct effect of information exchange on IJV performance as well as indirect (mediated) effect through mutual trust and reciprocal commitment, two key components of relationship capital. In addition, this paper investigates the role of environmental uncertainty as a moderator of these mediating effects. Results from a study of 205 contractual IJVs in China, a highly competitive and dynamic emerging market, show that foreign and local partners collaborate and co-evolve through regular information exchange that helps them build relationship capital with each other in the form of mutual trust and reciprocal commitment, which in turn leads to better IJV performance. In addition, environmental uncertainty negatively moderates (weakens) the positive effects of information exchange on mutual trust and reciprocal commitment but not their impact on IJV performance. The authors discuss the implications of these findings for future research on the role of relationship capital in the successful formation and management of IJVs in the emerging markets.

Technical risk factors of international construction

Construction is one of the strongholds for development in every country. The objective of the research is to identify the critical technical risk factors encountered by engineering firms on the global milieu. Based on questionnaire surveys, statistical analyses and previous studies on risk management, 23 risks were selected and ranked as technical factors that hinder construction projects. The relative importance index (RII) was used to determine the rank of each factor surveyed. The study revealed that industrial disputes, shortage in power supply, shortage in supply of water and problems of partner difference practice of construction globally were among the highly ranked technical risks. The study is beneficial as it adopts case studies in Africa to elicit the technical effects on the international frontlines. With the ranking of the technical risk factors, international construction firms can adequately enhance critical planning, avoid casualties and engage in economically viable projects. The study will be useful for analysing and investigating the hypothesised relationships technical risk variables that influence performance of international joint ventures. The risk factors displayed in the study can be used in supporting data for many other research development studies in the area of construction, risk analysis and global construction development studies.

Collectivist values for constructive conflict management in international joint venture effectiveness

PurposeThis study aims to identify mechanisms to manage conflicts that occur when organizations with different cultures, habits and experiences try to coordinate effectively in international joint ventures (IJV). This study proposes that partners can promote their joint venture performance to the extent that they rely on cooperative rather than competitive conflict management. This study further hypothesizes that adopting collectivist values strengthens relationships and thereby provides a foundation for cooperative conflict management.Design/methodology/approachThe authors collected data for this study in Shanghai, which is currently the most attractive province in China for FDI (FDI Intelligence, 2014). In all, 75 pairs of foreign and Chinese managers at middle and senior levels, knowledgeable about the joint venture relationships, completed their respective questionnaires.FindingsResults of the structural equation analyses support the hypotheses that collectivist values support cooperative conflict management that in turn facilitates joint venture learning and performance. In contrast, individualistic values promoted competitive conflict management which in turn frustrated IJV performance.Practical implicationsResults suggest that IJV managers can strengthen their venture by developing collective values and training such cooperative conflict management skills as self-expression and demonstrating understanding of opposing views.Originality/valueThis study directly documents that while conflicts may interfere they can also stimulate discussions and decisions that promote coordination and performance of IJVs. This study contributes to conflict management research that has largely focused on investigating the consequences of approaches by examining conditions that promote constructive conflict management approaches.

A Contingent View of Partner Coopetition in International Joint Ventures

Is coopetition between foreign and local partners good or bad for international joint venture (IJV) performance? This study develops a contingent view to examine how the efficacy of coopetition is conditional on IJV characteristics (i.e., foreign equity share and partner cultural compatibility) and environmental factors (i.e., technological turbulence and market growth). The results from analyzing 194 IJVs in China reveal that coopetition fosters IJV performance under the conditions of high foreign equity share, low partner cultural compatibility, high technological turbulence, and/or high market growth. In contrast, coopetition hinders IJV performance at low levels of foreign equity share, technological turbulence, and/or market growth, or at high levels of partner cultural compatibility. These findings support the authors’ contingent view of coopetition and provide novel insights for managing partner coopetition in IJVs.

Productivity and participation values for cooperative goals to limit free riding and promote performance in international joint ventures

This study holds that the development of cooperative goals instead of competitive goals among joint venture partners helps to limit free riding and promote performance in IJVs. The results collected from 75 pairs of Chinese and foreign joint venture partners suggest that productivity and participation values strengthen the partners’ beliefs that their goals are cooperatively related, which in turn, reduces free riding and promotes performance, whereas competitive goals promote free riding and obstruct joint performance. The paper also suggests how cooperation and competition research can complement established theoretical frameworks on the conditions and dynamics that result in IJV productivity.

The Moderating Roles of Knowledge Tensions on the Control- Performance Relationship in IJVs

Based on the transaction cost theory, organizational learning and knowledge-based view, this study investigates how different types of management control affect multinational enterprises' (MNEs) satisfaction with international joint venture (IJV) performance. The study also examines the moderating effects of learning intent and the risks of knowledge spillover on the relationship between management control and IJV performance. Through an analysis of 162 Taiwanese JVs, we find that (1) when sharing-protecting tension is faced by MNEs or local partners, split management control can result in higher IJV satisfaction than other control types; and (2) when MNEs and local partners face learning-sharing-protecting tension simultaneously, split management control and MNE dominant management control can result in higher IJV satisfaction than sharing management control.

Trust-performance relationship in international joint ventures: the moderating roles of structural mechanisms

PurposeThis study aims to investigate the relationship between trust and performance in international joint ventures (IJVs) with the moderating effects of the structural mechanisms from transaction cost approach.Design/methodology/approachUsing web-survey, data are collected from 89 IJVs of Northern European firms in Asia, Europe and America. Empirical data are analyzed with structural equation modeling and estimates moderating effects of symmetric dependence, symmetric equity share and resource complementarity.FindingsThe findings offer some interesting insights for transaction cost and the social exchange theory. This study demonstrates that a symmetric equity share between IJV partners does not moderate the trust–performance relationship, while a symmetric dependence and resource complementarity between partners effect positively. Therefore, trust takes on greater importance in enhancing IJV performance under symmetric dependence and resource complementarity and symmetric equity share between IJV partners deprecates the importance of equity distribution.Practical implicationsA symmetric dependence prevents the deceit from either partner in trusting relationships. Further, a trustful relationship enhances IJV performance regardless of the equity share in IJVs. IJVs with asymmetric equity share can also be successful, provided that IJV partners develop inter-partner trust.Originality/valueThe extant research has not examined how the trust–performance relationship is contingent on structural mechanisms of IJVs that transaction cost economics deem necessary to prevent opportunistic behavior. Three structural mechanisms of symmetric dependence, symmetric equity share and resource complementarity moderate the trust–performance relationship in IJVs.

An empirical analysis of the effects of humor on communication satisfaction and job performance in international joint ventures in Iran

AbstractThis study investigates the relationships between humor (frequency and effectiveness), communication satisfaction (informational and relational), and employee job performance (task and contextual) in international joint ventures in Iran. Based on a survey of 375 employees and their supervisors in two of the biggest joint ventures in the automotive industry in Iran, the results indicate that the frequency of humor had significant positive effects on contextual and task performance as well as on informational and relational communication satisfaction. In addition, informational communication satisfaction was significantly related to both contextual performance and task performance, whereas relational communication satisfaction was related only to task performance. Finally, informational communication satisfaction mediated the relationship between the frequency of humor and job performance (task and contextual), while relational communication satisfaction mediated the relationship between the frequency of humor and task performance.

Match-Making in International Joint Ventures in Emerging Economies: Aligning Asymmetric Financial Strength and Equity Stake

This paper attends to prior equivocal results concerning partner asymmetry and international joint venture (IJV) performance. More specifically, we examine how asymmetric financial strength between the partners influences IJV termination in emerging economies, and consider the asymmetry direction as well as the local partner’s equity stake as contingency factors. Our event history analysis of 119 IJVs formed in Brazil shows that asymmetric financial strength increases the likelihood of termination. However, notably, the findings reveal that higher local partner financial strength is less harmful to IJV performance than lower local partner financial strength. Moreover, under both conditions, IJV performance is better when the highest equity stake is attributed to the local partner.

A qualitative case study of MNE legitimacy

Purpose – An international joint venture (IJV) helps multinational enterprises (MNEs) overcome the “liability of foreignness.” However, in the presence of institutional voids, MNE’s overreliance on the local partner can result in the MNE unwittingly becoming involved in a corporate scandal. The purpose of this paper is to discuss the causes, impacts and outcomes on the MNE’s legitimacy following a corporate scandal. Design/methodology/approach – Using secondary data, this paper presents a qualitative case study of the Fonterra-Sanlu milk-powder scandal in China. Findings – The paper identifies the institutional voids that contributed to the scandal. It also examines the effects of the scandal on the MNE’s legitimacies and evaluates the appropriateness of its actions in China during the formation, erosion and repair stages of its legitimacy. Research limitations/implications – It contributes to legitimacy literature by discussing the importance of MNE’s active commitment when entering the emerging market. It argues that the building of pragmatic legitimacy is not sufficient, and explains why attendance to moral obligations is part of building moral and cognitive legitimacy. Originality/value – This unique case study of a corporate scandal offers deep insights into how, what and why questions regarding how the three forms of legitimacy are necessary for improving IJV performance by MNEs operating in emerging economies. It particularly highlights the importance of moral legitimacy as a mechanism for overcoming institutional voids.

The impact of environmental uncertainty on international joint venture performance: the mediating role of international joint venture adaptation

This paper investigates the role of international joint venture (IJV) adaptation in the relationship between environmental uncertainty and IJV performance. Four hypotheses are developed concerning this relationship, predicting a direct positive relationship between uncertainty and adaptation (H1); a direct negative relationship between uncertainty and performance (H2); a direct positive relationship between adaptation and performance (H3); and a mediating effect of IJV adaptation on the relationship between uncertainty and IJV performance (H4). To test these hypotheses, path analysis, a special case of the structural equation modelling (SEM) technique, is used on questionnaire survey data from 102 manufacturing IJVs operating in Turkey. The results of this analysis were consistent with the first three hypotheses. The mediating effect of IJV adaptation (H4) was also confirmed by a Sobel test and the bootstrapping approach, suggesting that IJV adaptation mitigates the negative impact of environmental uncertainty on IJV performance.

Performance measurement choices in international joint ventures: What factors drive them?

How to evaluate performance of an organization and what factors influence the choices of performance measurements have remained unclear. The question is even more complicated for jointly managed organizations like international joint ventures (IJVs). This research investigates the determinant factors of performance measures used by Nordic firms in their IJVs. We tested our hypotheses with 89 IJVs established by Nordic firms. The results show that firms' motives, level of trust and cultural distance between foreign and local firms all have a strong influence on the choice of performance measures used. Furthermore, firms choose performance measures depending on the stage of the unit in the IJV life cycle. Interestingly target country experience influenced the choice of performance measurement, but previous IJV experience did not influence the measures used. The study offers several implications for managers to choose appropriate measures for their IJV performance evaluation as well as opportunities for further research.

Performance, Partner Relationship, and Ownership Change in International Joint Ventures: The Case of Korean Firms in Asia

This article examines how interorganizational factors in two-party international joint ventures (IJVs) affect subsequent IJV ownership changes. It specifically examines the primary impact of IJV performance and the moderating impacts of initial ownership structures, and duration. Utilizing a data set of Korean foreign direct investment, the authors find that the ownership structures of IJVs with lower performance are more likely to change. The authors also find that unbalanced ownership promotes subsequent ownership changes, whereas longer IJV duration retards ownership changes in even lower-performing IJVs. The findings imply that relational changes reflected in IJV ownership depend on shared bargaining power and relational solidarity.

Fit, misfit, and beyond fit: Relational metaphors and semantic fit in international joint ventures

We propose that metaphorical descriptions of newly formed international joint ventures (IJVs) contain important, diagnostic information regarding the way these cross-border alliances are managed and perform. In three studies, we examine how relational metaphors reflect semantic fit, or the IJV partners’ cognitive match of managerial schemas and their capability to recontextualize communications regarding alliance operations. We find IJV partners that share relational metaphors achieve superior outcomes, reflecting aligned managerial approaches to controlling shared resources and joint activities. Further, formal ownership as equity share moderates the impact managerial schemas implied by metaphors have on subjective, time-lagged performance of IJVs. Our analysis of metaphorical language not only reveals the way newly formed IJVs are managed, but also highlights performance variations associated with complex patterns of IJV controls.

Reexamining the relationship between control mechanisms and international joint venture performance: The mediating roles of perceived value gap and information asymmetry

According to transaction cost theory, the risk of opportunism is a major obstacle to cooperative relationships, such that multinational corporations need to exert control over their international joint ventures (IJVs). However, inconsistent findings indicate that the control–performance linkage is complex and poorly understood. This study develops a mediating framework and suggests that perceived value gap and information asymmetry have a direct effect on IJV performance. Perceived value gap and information asymmetry can also mediate the relationship between control mechanisms (e.g., centralization, formalization, and socialization) and IJV performance. A sample of 152 Taiwanese IJVs in China showed that the direct effects of formalization and socialization on IJV performance satisfaction were significant. The empirical results showed that information asymmetry and perceived value gap mediated the formalization–performance and socialization–performance relationships. However, neither the direct effect of centralization nor the indirect effect through information asymmetry mediation on IJV performance was significant.