Joint Venture Activity Research Articles

Joint venture investments and the market value of the firm

The impact of Joint Venture announcements on the market value of UK listed companies is examined. Based on a sample of 158 announcements of either joint venture formation or joint venture activities, significant positive market-adjusted abnormal returns of 0.5% on the announcement date are observed. Cross-sectional analysis reveals that abnormal returns are significantly lower when undertaken by large companies, or where the project is located in Asia. On the other hand, market-adjusted returns are found to be significantly higher when the project is large compared to the size of the company undertaking the investment, and where the project is either domestic or located within the European Union.

Joint Venture Investments and the Market Value of the Firm

This paper examines the impact of Joint Venture announcements on the market value of UK listed companies. Based on a sample of 158 announcements of either joint venture formation or joint venture activities, we observe significant positive market-adjusted abnormal returns of 0.5% on the announcement date. Cross-sectional analysis reveals that abnormal returns are significantly lower when undertaken by large companies, or where the project is located in Asia. On the other hand, market-adjusted returns are found to be significantly higher when the project is large compared to the size of the company undertaking the investment, and where the project is either domestic or located within the European Union.

Doing Business in India: A Minnesota Entrepreneur's Experience

This paper describes the author's attempts to develop business with Indian family firms during the last three years. Specific features of the Indian business environment are discussed, along with information for those who desire to export Indian products to the United States. The paper also reviews experiences of large American firms that have joint ventures in India as an indication of what small joint-venture firms might expect in India. The author concludes that import-based activity is high risk and that joint-venture activity for small American firms cannot be recommended in India at this time. The paper explores some possible solutions to business risk that may increase business activity between small American firms and Indian family firms.

Strategic Motives and Partner Selection Criteria in International Joint Ventures in Turkey

This paper provides an analysis of two important aspects of international joint venture (IJV) activity between Western MNEs and local partner firms in Turkey. First, the strategic motives for IJV formation are investigated from the comparative perspective of Western firms and local partners. As hypothesised a number of significant differences are found in the relative importance of strategic motives between foreign partner firms and Turkish partner firms. Second, the paper considers criteria used by Western firms and Turkish firms when selecting IJV partners. As hypothesised a number of significant differences are found in the relative importance of selection criteria between foreign partner firms and Turkish partner firms. Third, the paper considers the relationship between selection criteria and strategic motives by examining a multiple regression model using the factors of selection criteria and the factors of strategic motives as dependent and independent variables respectively. There is some support for the hypothesis that the relative importance of the selection criteria varies with the strategic motives of the IJV.

Western joint ventures in Turkey: strategic motives and partner selection criteria

This paper considers two important aspects of joint venture (JV) activity between Western firms and local partner firms in Turkey. First, the strategic motivation for JV formation is investigated for a sample of Western partner firms. The relative importance of a set of strategic motives is identified and discussed with respect to the nationality of foreign partner. Second, the paper considers partner selection criteria for the sample using a typology that distinguishes between partner‐related and task‐related selection criteria and also examines the relationship between the relative importance of selection criteria and the nationality of foreign partner.

THE VALUE OF EXPERIENTIAL LEARNING BY ORGANIZATIONS: EVIDENCE FROM INTERNATIONAL JOINT VENTURES

AbstractWe use a sample of international joint venture announcements to test the hypothesis that organizations learn from experience, such that prior learning enhances the value of later ventures. We find that experience with ventures in the same foreign location, as well as experience with international joint ventures in general, is valued by the market. In contrast, experience in the same type of joint venture activity does not add any incremental value. These findings suggest the market recognizes and values some, although not all, forms of organizational learning.

Joint Disease Management Ventures in the UK

A postal questionnaire was sent out to individuals in the National Health Service (NHS) and in the pharmaceutical industry known to be involved in joint disease management ventures, details of which were available in the public domain. The questionnaire was designed to uncover information about the roles played by the partners in the venture, the disease areas covered and the use of guidelines. Of the 25 joint disease management questionnaires sent out, 14 responses were received, giving a response rate of 56%. The ventures covered a range of diseases, but concentrated on respiratory and cardiovascular disease. Three of the projects were concerned with sexual health. The pharmaceutical industry acted in an enabling role in all these projects, offering support in the areas of finance, research, and communication and information technology expertise. In no case did a pharmaceutical company both provide and finance care directly. This is the only case known to the authors of an attempt to collate information on joint disease management ventures in the NHS. However, it should be noted that the results presented in this paper cover only one quarter to one half of all the current NHS joint venture activity.

“Basket cases”: Tax incentives and international joint venture participation by American multinational firms

This paper examines the impact of the U.S. Tax Reform Act of 1986 (TRA) on international joint ventures by American firms. The TRA mandates the use of separate “baskets” in calculating foreign tax credits on dividends received from each foreign corporation owned 50% or less by Americans – which greatly reduces the attractiveness of joint ventures, especially those in low-tax foreign countries. Since the effect of the TRA on joint ventures varies with foreign tax rates, the country-level pattern of subsequent joint venture activity illustrates the sensitivity of organizational form to tax considerations. The evidence indicates that American participation in international joint ventures fell sharply after 1986, particularly in low-tax countries. Moreover, joint ventures in low-tax countries use more debt and pay greater royalties to their American parents after 1986, reflecting their incentives to economize on dividend payments.

Joint venture issues concerning European and Asian construction markets of the 1990's

In this paper, joint ventures are first defined and then different types of joint ventures are reviewed, including integrated and non-integrated forms with some attention given to short and long term arrangements. This leads on to a discussion of results from an empirical survey with five construction companies who were involved in joint venture activities in the construction industry. The survey covers managers' direct experiences of a large number of projects in which the various parties have been involved. The discussion of these results naturally addresses how joint ventures may best be conducted in future.

Estimating the performance of Sino‐Hong Kong joint ventures using neuralnetwork ensembles

Prediction of the performance of international joint ventures remains a relatively under‐researched area, yet its importance is well recognized due to the tremendous surge in joint venture activities in the past decade. Data on 1,463 Sino‐Hong Kong joint ventures were gathered and those that appeared on the Honor Roll of the China Association of Enterprises with Foreign Investment are identified. Neural network models were used to relate the posterior probability ‐ the probability that a venture gets on the Honor Roll ‐ and the seven economic variables. A simple and yet powerful method called the ensemble method was used to estimate the posterior probability. The results indicate that every variable, except one, has influence on the probability of success. Perhaps more important, the results demonstrate that the modeling approach is able to mine useful information from the data set.

UK International Joint Ventures with the Triad: Evidence for the 1990s

This paper identifies and analyses some basic trends and patterns in international joint venture activity between UK firms and partner firms located in the Triad (North America, Western Europe and Japan) over the 1990–96 period. Several dimensions of UK international joint venture activity are examined: trends over time, geographic distribution of foreign partners, industry characteristics, the purpose of the venture, the number of partners and the UK partners' equity shareholding. The study serves to update and extend previous analyses of UK international joint venture activity with partners from developed market economies.

Dimensions of Russia's Industrial Transformation, 1992 to 1998: An Overview

A prominent Western authority on economic affairs in the former Soviet Union examines major dimensions of Russia's industrial transformation since 1991, focusing on changes in production volume, structure, and organization (e.g., property ownership). An initial section analyzes the dynamics of output, employment, and investment in major industrial branches and presents estimates of factor productivity, followed by an assessment of organizational change (e.g., privatization, joint-venture activity). Coverage then focuses on regional differences in industrial transformation as reflected in such indices as growth in number of enterprises, public-private shares of ownership, and growth in number of foreign-participant firms. Journal of Economic Literature, Classification Numbers: L60, L70, O40, O50. 7 tables, 56 references.

PETROLEUM EXPLORATION AND PRODUCTION- WHAT ARE THE ENVIRONMENTAL OBLIGATIONS OF JOINT VENTURE PARTICIPANTS?

Participants in joint venture operating agreements in Australia are potentially liable for environmental offences under State environmental statutes as well as Petroleum (Submerged Lands) Acts and State Petroleum Acts. In addition, adverse environmental impacts can affect an array of other commercial factors, including the future costs of obtaining finance, insurance cover and access to new acreage.The nature of potential risks and liabilities are such that environmental management must be regarded as an on-going risk management activity, integrated into all planning and day-to-day operations in the same way that health and safety management is now being widely incorporated in petroleum industry activities. Joint venture participants generally pay considerable attention to the calibre of the technical (geological and engineering) advice provided by the operator. It follows that they should also place considerable importance on the calibre of environmental management expertise provided by the operator and its contractors.A successful system of management should be modelled on a due diligence defence, which requires that those who are directing joint venture activities exercise due diligence, requiring the establishment of a proper system to prevent violations of the law and the effective operation of that system, including supervision, maintenance and improvements in business methods.

UK joint venture activity in the Czech Republic: motives and uses

Presents the initial findings of an ongoing study into the motives and uses of the joint venture by British investors in the Czech Republic. Observes that, despite the many opportunities presented of doing business in Eastern Europe, the British have been slow to invest; the UK does not feature in the top seven investors in the Czech Republic. Points out that it is a widely held belief that the joint venture is the most common mode of entry used by Western firms when investing in Central and Eastern Europe. Contends that there is a clear match between the needs of market‐seeking or cost advantage‐seeking Western firms on the one hand and the technological needs of the Eastern Europeans on the other. However, suggests from the study data that UK investors have chosen to own their foreign operations wholly rather than work with local partners. Examines the different modes of entry, the sector and the function of investment used by British firms. Notes the predominance of service activities.

Feasibility study of wind energy potential in China

Remarkable economic achievements have been made in China since the economic reform in 1978. High agricultural and industrial productivity as well as rapid development of the tertiary industry and continuous improvement of living standard have resulted in a jumping power demand. The pressing need for updating the current infrastructure, power industry in particular is the key to the sustainable economic growth and continuous industrialisation. The crucial role of rural industry in economic development and the fact of over 70% of the rural population have brought a great opportunity for wind energy development. One of the most cost-effective ways to diffuse wind power technology is through technology transfer based on joint venture activities due to the enormous initial capital investment and complexity of wind power technology to ease the severe domestic power shortage. Foreign aid and investment will no doubt have a stimulatory effect on wind energy development in China. The future benefits in terms of technology transfer and international trade will easily outweigh the current problems and thus contribute to sustainable economic development in many years to come.

U.S. Joint Venture Activities in the Former Soviet Union

The study focuses on primarily big U.S. firms' joint venture activities with the Soviets after the break‐up of the former Soviet Union. It examines U.S.‐Soviet joint ventures in the following sectors: oil and gas, soft drinks, consumer products, gold mining, aircraft engines, telecommunications, and software. Data were collected by mail and interviews in order to identify the obstacles in the negotiation and operational stages of the venture. Furthermore, business and governmental organisations' recommendations as to whether or not U.S. firms should engage in joint venture activities in the Commonwealth of Independent States (CIS) were elicited.

Oil and Gas Development in East Siberia

The East Siberian region, which comprises nearly 43% of Russia's territory (including the Sakha (Yakut) republic), has substantial hydrocarbon potential that is impeded by significant logistical problems, the daunting physical environment, and technical challenges posed by the geological complexity of the region. The area's three major oil and gas provinces are the Lena- Tunguska (with the greatest potential), Lena-Vilyuy, and Yenisey-Anabar. The paper focuses on assessment of reserves, production potential, and history, as well as joint-venture activity involving foreign capital. Foreign investment is targeting gas deposits in the Vilyuy basin and elsewhere in the Sakha republic and small oil deposits serving local markets in the Yakutsk and Noril'sk areas. Forecasts do not envisage substantial production of oil from the region before the year 2010. Future gas production levels are less predictable despite the ambitious plans to export gas from Sakha to South Korea.

Observations on Oil and Gas Production in the Timan-Pechora Basin

The Timan-Pechora basin, a promising hydrocarbon-producing region in the European part of Russia, reportedly has an estimated 1.3 billion tons of “proven” (A+B+C1) and 0.6 billion tons of C2 reserves of oil and 800 billion cubic meters of A+B+C2 reserves of natural gas. The distribution of the basin's reserves, embracing federally subordinated, republican, and autonomous jurisdictions, tends to create opportunities as well as additional complications for foreign developers. Harsh climatic conditions, swampy terrain, and other difficulties (e.g., heavy and paraffinic oils) have impeded rapid development. Nevertheless, the Timan-Pechora basin has become a major focus of joint venture activity involving, among other multinational oil companies, Conoco, Texaco, Exxon, and Amoco. New projects, with previously discovered fields containing an estimated 2 to 5 billion barrels of oil, appear to offer potential yields of about 6 million tons per annum by the year 2000.

Subcontracting and the Global‐Local Connection: Myth and Reality

The purpose of this paper is to question some of the assumptions underlying the new localism. To address the issue it will be necessary to construct a more sensitive approach to global structuring, before issues affecting the local economy can be addressed. In particular, I want to argue that the increasing prevalence of merger and joint venture activity, on an international scale, coupled with new JIT buyer‐supplier relations is not, of necessity, going to lead to a new localised geography of production, nor are small firms going to gain from this process. Local economies are unlikely to take on a dramatically more robust or independent character; a state of play widely recognised before flexible specialisation ever emerged.

U.S./Hungarian Joint Ventures:

Significant coverage of the dramatic events in Eastern Europe and the Soviet Union has elevated the interest in doing business in these areas on the part of business people, government officials, and consumers alike. The importance of this activity to both the once controlled economies and to Western companies cannot be overstated. one mechanism for achieving this business activity–joint ventures–is the focus of this article. All aspects of U.S. joint venture activity in Hungary are examined as a potentially good mechanism for entering other markets in Eastern Europe, the Soviet Union, and the European Community.