Control In Joint Ventures Research Articles

Contractual Protection of Intellectual Property Rights

Abstract Accompanying the rise of China in the world economy, intellectual property right protection comes to be the major issue apropos of international trade disputes in recent years. This paper, adopting the transaction costs paradigm and applying the contract theory, investigates and examines a form of contractual protection effectuated by market forces. The study shows that the contractual arrangement constituted by joint venture agreement with offsetting contractual arrangement is a form of intellectual property right protection driven by market forces. This contractual arrangement, though arising under the state policy of joint venture control, functions as an effective protection of intellectual property rights by fully pricing and protecting such hardly enforceable rights.

The Control and Performance of Joint Ventures

We analyze the control and performance of assets operating in joint ventures (JVs). Control in JVs is determined by the allocation of voting rights and by the contracts that govern the JVs. This hybrid allocation of control seeks to reduce the potential for ex post opportunism. The results suggest that contractual provisions encourage collaboration and improve JV performance when one of the partners accepts a minority position on the board. The analysis also reveals that with the exception of JVs with contractual option provisions, assets operating in our sample of JVs generate higher returns than assets in fully controlled subsidiaries.

Performance Implications of IJV Boards: A Contingency Perspective

AbstractThis study draws from the corporate governance literature to investigate the implications of board involvement for international joint ventures (IJVs). We extend recent corporate governance research on the value of board involvement by investigating unique sources of complexity related to the nature of the IJV. We argue and find that board involvement can enhance the performance of IJVs, particularly for collaborations that are complex in nature due to their broad functional scope as well the level of market overlap between IJV parents. We complement recent research on joint venture control that has focused on the antecedents and types of control, as well as studies on formal (e.g. contractual safeguards and monitoring) and informal governance mechanisms (e.g. trust) by providing empirical evidence that IJV board involvement is valuable when directors undertake their control and coordination responsibilities. We advance corporate governance research by providing evidence that joint ventures possess several unique characteristics that shape the value of board involvement, thereby showing that applications of corporate governance theory to joint ventures are useful, but should be made with care.

Merger Regulation Under Ethiopian Competition Law: A Comparative Overview

This article examines Ethiopia’s competition and consumer protection laws, and focuses on merger regulation. It compares the merger regulations of the United States of America, European Union, United Kingdom and South Africa, and highlights lessons this comparison has for Ethiopia. The article aims to answer the following questions:1) What are the different types of mergers and what are their effects on competition?2) How should merger regulation address threshold limits, pre-merger notification, and substantive tests for reviewing mergers?3) How does competition law deal with joint ventures?4) What are Ethiopia’s merger regulation’s major strengths and weaknesses?5) What lessons could Ethiopia draw from international experiences to improve its merger regime?It is organized into six sections. The first section reviews Ethiopian competition law, and explores the FDRE Constitution, Codes and recent Proclamations. The second and third sections explain different types of mergers, and elaborate on their effects and consequences. The fourth section discusses Ethiopian and international merger regulation, focusing on threshold limits, merger notification, tests used for merger assessment and the factors competition authorities consider when reviewing mergers. The fifth section looks into joint venture control. Finally, the article concludes with suggestions to improve Ethiopian merger regulation.

The Control and Performance of Joint Ventures

We analyze the control and performance of assets operating in joint ventures (JVs). Control in JVs is determined by the allocation of voting rights and by the contracts that govern the JVs. This hybrid allocation of control is aimed to ameliorate the potential for ex-post opportunism. An equal distribution of voting rights in the JVs’ board is associated with lower performance. Contractual provisions that determine the control in JVs are generally associated with a negative performance of JVs governed by equally controlled boards, but with a positive performance of JVs with boards controlled by one partner. The analysis suggests that contractual provisions encourage collaboration and improve JVs’ performance when one of the partners accepts a minority position in the board. The analysis also reveals that, with the exception of JVs with contractual option provisions, assets operating in our sample of JVs generate higher returns than assets in fully controlled subsidiaries.

No Strategy is an Island to Itself

The first-mover strategy for foreign investment is examined to determine under what conditions a significant effect exists when it is combined with other foreign investment strategies like partner selection, geographical market focus, joint-venture control, and resource commitment strategies. Using official audited data and survey data from Sichuan, the results reveal that there are significant interaction effects. The interaction effects can eliminate first-mover advantage, create a first-mover effect that previously didn’t exist, or change the direction of the effect. Consequently, the author argues that it is better to analyze strategies as a set that is formed by a series of strategic decisions made by managers as they establish foreign joint ventures and wholly owned subsidiaries.

Private control and collective control in international joint ventures

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

Management control patterns in joint venture relationships: A model and an exploratory study

Joint ventures provide advantages to parent companies, for instance by gaining quick access to new resources. However, their shared ownership gives rise to complexities involving control issues. We propose an integrated model of joint venture control, which adds relational issues to the TCE framework. By combining transaction and relational characteristics, we argue that three different management control patterns can be distinguished: a content-based control pattern, a consultation-based control pattern, and a context-based control pattern. We empirically examine these three patterns by conducting two exploratory case studies.

The Coevolution of Trust, Control, and Learning in Joint Ventures

This article examines the evolution of trust, control, and learning in a joint venture relationship. Using a coevolutionary approach, we develop a framework that shows how initial joint venture conditions give way to evolved conditions as joint venture partners develop an understanding of each other and adjust the collaborative process. We explore the relationship between trust and control in joint ventures and identify how these two critical concepts impact joint venture processes. We argue that trust, along with partner collaborative objectives, creates the initial climate that shapes partner interactions. In turn, these interactions lead to subsequent decisions about the nature of controls. We then examine linkages between alliance learning and the trust and control concepts, and argue that learning processes are central to evolving joint venture dynamics. Once the joint venture is formed, and if the initial conditions support continued collaboration, then learning processes will be central to evolving alliance dynamics. As initial conditions give way to evolved conditions, learning and trust will coevolve and impact decisions about control. Propositions linking the concepts are provided as guides for future empirical research.

Ownership and Control in Joint Ventures: Theory and Evidence

Joint ventures afford unique opportunities to study how firms assert property rights over jointly used assets because parents clearly delineate control. We argue that ownership allocations trade off investment incentives with control-related inefficiencies. We show how residual control rights can create a discontinuity in parent incentives that explains the observed clustering of ownership at 50-50 and 50-plus-one-share equity allocations. At the same time, the incentive benefits of ownership preserve a rationale for a wide spectrum of asymmetric shareholdings. Analyzing the determinants of ownership in US joint ventures, we find that, consistent with our model, the higher the potential for unilateral value extraction the more parents prefer equal shareholdings regardless of their attributes. Similarly, parent-specific spillovers make 50-50 ownership more attractive to the detriment of one-sided control whereas complementarities in parent resources have the opposite effect.

Joint Ventures in China: A Comparative Study of Japanese, Korean, and U.S. Partners

The authors develop a model to examine systematically the relationship among motivation, control, and performance of joint ventures in China. Motivations are categorized into three dimensions: efficiency, competition, and learning. Motivations determine the level of control in joint ventures, and that level affects the joint venture's performance. The authors collected data from Japanese, Korean, and U.S. partners of joint ventures in China. They use structural equation modeling to test the model and examine cross-national differences using a multigroup comparison method. The results suggest a complex relationship among motivation, control, and performance. More control over joint ventures in China is beneficial to foreign partners, but the ability to exert control is influenced by firms’ strategic intentions and familiarity with the local culture and market. Foreign partners that have such familiarity can exert considerable control over joint ventures and still obtain local knowledge. Foreign partners that want to enhance competitiveness can apply their advanced skills and technology in research and development, production, and management to exert more control over these functional areas.

Contrôle et performance des co-entreprises à l'étranger : analyse de trente-cinq « joint-ventures » ayant un parent français

Cet article souleve le probleme de la relation entre le controle et la performance des « joint-ventures » internationales. Apres avoir note la specificite du controle dans les co-entreprises, l’article presente les resultats d’une enquete menee aupres de trente-cinq co-entreprises a l’etranger ayant un parent francais. Il montre que les « joint-ventures » jouissent d’une autonomie relativement faible, autant sur le plan strategique qu’operationnel. Le controle repose sur des systemes manageriaux (reporting, controle budgetaire) et contractuels (licence, contrat de gestion, contrat d’approvisionnement, etc.). Les resultats montrent aussi que les mecanismes bureaucratiques de controle restent tres presents et que la performance semble etre liee a l’exercice d’un controle intense.

The Illusion of State Power: Transnational Corporations and the Neutralization of Host-Country Legislation

Ten years ago there was widespread agreement that transnational corporations constrained the exercise of state power in the Third World. During the 1970s, however, there have been increasing challenges to this idea. Neo-conservatives, neo-mercantilists, bargaining writers, and statists have all been struck by the growth of economic nationalism and the resurgence of the state. Thus, a new orthodoxy has emerged which suggests that the transnational corporation rather than national sovereignty is increasingly 'at bay'. The research described in this article examined the responses of transnational corporations to Nigeria's increasingly stringent indigenization policies during the 1970s. Transnational corporations have developed a range of defensive strategies which effectively neutralize the Nigerian policy. Thus it is clear first that an increase in the frequency of state actions is by no means equivalent to an increase in the effectiveness of state actions. Second, the sharing of equity is a long way from the sharing of control in joint ventures with transnational corporations. Third, any assessment of the balance of bargaining power between states and transnational corporations must take account of the dynamics of change within each of the major protagonists. Changes have taken place in the relationship between states and transnational corporations during the 1970s. However, most observers have ignored the defensive responses and capabilities of transnational corporations. The balance of bargaining power between host- countries and transnational corporations has not shifted either as far or as quickly as most of the advocates of the 'resurgence of the state' literature maintain.