International Joint Ventures Performance Research Articles

International joint venture strategies and performance in the Baltic States

Purpose– The purpose of this paper is to analyse investment strategies and performance of Finnish firms in their international joint ventures (IJVs) established in Baltic States.Design/methodology/approach– The paper analyse performance of IJVs in Baltic States based on the IJV theory, international business literature, and foreign direct investments in Central and Eastern Europe (CEE) literature. The analysed factors include firm, investment, and inter-partner relationship-specific factors. To examine the propositions the paper used ten IJVs established by Finnish firms in various Baltic States between the period 1991 and 2005.Findings– The results show that the level of uncertainties in the countries and the differences between partners are not related to firms’ commitments and the entry mode choice. Several Finnish firms preferred cost leadership to compete with other firms in the local markets. In most cases there was a positive relationship between the level of partners’ equity share, commitment to the IJV, and the level of trust between partners. The results indicated differences in the IJV performance depending on parent firms’ objectives, their competitive strategies, mode of entry, age of IJVs, control strategies, level of trust, and commitment between partners, as well as depending on the performance measures used.Practical implications– This study suggests four observations that managers may need to take into consideration to improve IJV performance in the Baltic States. First, cost leadership strategy help to increase IJV performance in terms of sales. Second, social control mechanisms and narrow control leaded to better performance than formal and wide control. Third, minority ownership by Finnish firms in IJVs leaded to better performance based on sales, productivity and total performance whereas majority ownership had leaded to better performance in terms of total costs. Finally, the results confirmed that commitment to the IJV operation and trust on the other partner are very essential factors to IJV performance.Originality/value– The study is the first one to analyse in more detail based on several cases the IJV strategies and performance of Finnish firms in the Baltic States. The analysed factors include several such factors which have not been analysed related to IJV operations in Baltic States (some also limitedly in the CEE context).

International joint venture marketing performance in China: a resource-based approach

The purpose of this paper was to examine the empirical links between learning, innovation and marketing performance in Chinese international joint ventures (IJVs). The relationship between market-focused learning, internal learning, external learning and innovation with IJV marketing performance was examined via an empirical investigation of 313 IJVs in China. Data were gathered via a self-administered mail survey directed to the chief executive officer (CEO). The sample came from a wide cross-section of industries. The findings indicate that market-focused learning, internal learning and innovation had a significant impact on marketing performance in Chinese IJVs. External learning was deemed to have no impact on IJV marketing performance.

The Relationship between Partner Knowledge Asymmetries and Learning Performance in International Joint Ventures

The Relationship between Partner Knowledge Asymmetries and Learning Performance in International Joint Ventures

Revisiting the Trustworthiness–Performance–Governance Nexus in International Joint Ventures

This paper contributes to the research on international joint ventures (IJV) in the following ways: (1) by identifying different patterns of governance that partners in the post-formation period exercise and examining how contrasting patterns relate to variations in perceived partner’s trustworthiness, as well as to IJV performance; (2) by empirically testing the extent to which partners emphasize or even renegotiate and change different elements of governance; and (3) by complementing existing studies that have examined only unidirectional links among trustworthiness, performance and governance by considering possible simultaneous relationships that may exist among these variables. The findings from a survey and follow-up interviews with international joint ventures located in Taiwan reveal that levels of partners’ trustworthiness and performance satisfaction each, by itself, may lead to the deployment of different governance measures. However, it is the combinations of extreme (high or low) variants on both partners’ trustworthiness and performance satisfaction that seem to generate clearer patterns of governance. Low satisfaction and partners’ trustworthiness seem to encourage intensification of control or the deployment of more aggressive governance measures. In contrast, high performance satisfaction and partners’ trustworthiness may foster a combination of soft and routine forms of control.

Transfers of tacit vs. explicit knowledge and performance in international joint ventures: The role of age

This paper studies the transfer of tacit and explicit knowledge from foreign parents to international joint ventures (IJVs) and the impact of these two types of knowledge transfers on the performance of young and mature IJVs. We estimate a structural equation model using survey data from 334 Korean joint ventures and find support for our hypotheses regarding IJV age, knowledge transfers, and performance. Our results show that IJV age is positively associated with the transfer of tacit knowledge, but not with the transfer of explicit knowledge. In contrast, the transfer of tacit knowledge has a significant impact on the performance of both young and mature IJVs, while the transfer of explicit knowledge only has a significant effect on the performance of mature IJVs. These results confirm the important role of IJV age as a driver of knowledge transfers in IJVs, and as a moderator of their effects on performance.

Too Much of a Good Thing: the Role of Organizational Identification on organizational performance

The literature on organizational identification has overwhelmingly focused on the benefits of identification with a given entity. This study provides a nuanced understanding about the role of organizational identification in knowledge creation and firm performance. We propose a curvilinear relationship between top management team (TMT) organizational identification and international joint venture (IJV) performance. TMT organizational identification is beneficial to IJV performance till certain point. When TMT members are over-identified with the focal organization, its effect on IJV performance becomes negative. This study has important implications for organizational identification theory and joint venture studies.

The impact of national and organizational cultural differences on international joint venture performance

The purpose of this study is to theoretically explore how national cultural differences, organizational cultural differences and trust between partners can influence IJV performance. Findings from previous studies have been mixed, and this study attempts to address the relationship and performance issues by theoretically advancing a model to explain the inconclusive results found to date. Based on previous research, the findings of this study are as follows. Firstly, in terms of the relationship between national cultural differences and IJV performance, differences in the national cultures of IJV partners adversely influence IJV performance. Secondly, in the case of the relationship between organizational culture and IJV performance, differences in organizational culture between IJV partners create organizational problems that adversely influence IJV performance. Thirdly, with regard to national versus organizational cultural differences and IJV performance, organizational cultural differences represent the visible differences between, as opposed to the latent effects of, cultural differences, and these may cause greater interaction problems between the IJV partners. Fourthly, in terms of partnership trust and IJV performance, partnership trust positively influences partner interaction and venture performance. Finally, in the case of national culture, partnership trust and IJV performance, it is argued that national and organizational cultural differences adversely influence process- based trust producing mechanisms, or partnership trust. It is also empirically established that partnership trust significantly influences IJV performance. Therefore, partnership trust mediates the relationship between cultural differences and IJV performance through a chain of interactive processes.

The Influence of Host Country Experience on Backward Venturing

This study argues that with the increased operational uniqueness and complexity of international joint ventures (IJVs) associated with backward venturing, the host country experience of foreign firms may be less beneficial or even harmful to IJV performance. In support of this argument, our analysis using data on IJVs in Japan shows that when IJVs are associated with backward venturing, the effect of host country experience heterogeneity and host country experience within the IJV industry on reducing IJV failure rates decreases, while greater host country experience outside the IJV industry increases the IJV failure rates.

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.

The impact of foreign parent control mechanisms upon measurements of performance in IJVs in South Korea

PurposeThe purpose of this paper is to generate an observable relationship between five control mechanisms used by parent firms to direct international joint ventures (IJVs) with three distinct performance measurements. By observing relationships with different performance measures it serves to enhance the debate on IJV creation and control functions.Design/methodology/approachThis paper looks at IJVs and analyzes the application of control mechanisms through a survey of IJVs in South Korea, then a further review of the different performance measurements is provided to expound upon the increasing reasons of IJV creation.FindingsThe paper determines different impacts upon performance measures through the use of either personnel or policy measures. Parents' use of personnel shows a direct relationship with satisfaction levels of IJV performance, while policy measures show significant relationships to both financial and growth measurements. The paper finds that through the use of multiple performance measurements there is a greater understanding of the implications of control of different aspects of an IJV.Research limitations/implicationsThe paper is concentrated solely on IJVs in South Korea; and further, measurements based on perception are consistently subject to accuracy concerns in statistical analysis.Practical implicationsIJVs are set up with different goals. Utilizing control mechanisms that enhance the performance goal of a parent can provide support during the creation and negotiation process.Originality/valueThe value provided by this paper is the critical analysis of control mechanisms on more than one performance measurement and a quantifiable statistical analysis that shows significant impact of certain mechanisms.

The Balanced Scorecard as a Framework for Measuring International Joint Ventures Performance

International joint ventures present a factor that becomes more and more important in the commercial activities of companies. However, the development of systems for performance measurement of joint ventures remains largely unsolved. In this article, the Balanced Scorecard is adjusted to the requirements of joint ventures. This concept is especially appealing for joint ventures, because mere financial performance measurement is absolutely inadequate, if non-financial goals are pursued by the joint venture-partners. It reduces the complexity of the decision-making process by its focus on critical success factors and their clustering into four perspectives. As the utilization of synergies and soft factors like mutual trust and harmony are crucial for the success of joint ventures, the authors suggest the addition of a cooperation perspective to incorporate these issues. The concrete application and the design of the different perspectives of a Balanced Scorecard are illustrated by the example of the Chinese-German joint venture Ameco.Key words : international joint venture; balanced scorecard; performance measurement, case study

Top management team trust, behavioral integration and the performance of international joint ventures

PurposeThis study seeks to identify antecedents of trust among top managers representing partners in international joint ventures (IJVs) and to show how this trust influences IJV performance.Design/methodology/approachThe paper proposes that the national cultural distance of the foreign partner, the business similarity of partners' organizations and behavioural integration are antecedents to trust, and that trust is a key mediator through which these antecedents affect IJV performance. Data are collected through a field survey from IJVs in Beijing and Shenzhen, PRC, and employ regression analysis to test these propositions.FindingsIt is found that: trust across IJV factional subgroups is influenced by partners' business similarity and by the behavioural integration of top managers representing the partners from both sides; and this trust mediates the relationship between the behavioural integration of top managers in Sino‐foreign IJVs and overall venture performance. The effects of business similarity and partner national cultural distance on overall performance were not mediated by trust.Research limitations/implicationsThe sample of the study used is limited to one country only – China. Besides, the paper's measures of cultural distance and categorization of national origin of foreign partners of IJVs may be subject to criticism.Practical implicationsFirst, the paper explicitly hypothesizes and tests the role of trust as a mediator of the relationships between trust antecedents and IJV performance. This is done in order to develop a more detailed understanding of how fixed partner characteristics and adjustable group processes affect IJV outcomes. Second, the study finds evidence that supports situational perspective and developmental perspective of trust development, but not the deterministic perspective. This is also consistent with some additional qualitative evidence which the authors collected through interviews. Third, the results indicate that some trust antecedents have direct effects on IJV performance, while others affect IJV performance through partner trust.Originality/valueThe study's exploratory results offer important new information for IJV researchers and for managers of IJVs.

Contracting institutions and ownership structure in international joint ventures

This paper examines the role of contracting institutions on a multinational firm's optimal ownership strategy. We develop a model in which both a multinational firm and its local joint venture partner can ex post engage in costly rent-seeking actions to increase their ex ante agreed upon revenue share. We show that the host country's level of contract enforcement and level of judicial favoritism affect the parties' incentives to contribute to the international joint venture. The model allows us to identify testable hypotheses relating these institutional features with the performance and optimal ownership structure of international joint ventures.

Expatriate Managers, Product Relatedness, and IJV Performance: A Resource and Knowledge-based Perspective

Abstract Drawing from the resource and knowledge-based perspectives, we examine the role expatriates play as a critical managerial resource within the multinational's international joint-venture (IJV). By using a large sample (3772 IJV annual performance years) of Japanese IJVs in the USA from 1991 to 2001, we find that expatriate deployment shows a curvilinear (inverted-U) relationship with IJV performance. Further, this relationship is positively moderated by product relatedness between the parent and the IJV.

"TMT Organizational Identification, Knowledge Creation and International Joint Venture Performance"

The literature on organizational identification has overwhelmingly focused on the benefits of identification with a given entity. This study provides a nuanced understanding about the role of organizational identification in knowledge creation and firm performance. We propose a curvilinear relationship between top management team (TMT) organizational identification and international joint venture (IJV) performance. TMT organizational identification is beneficial to IJV performance through TMT knowledge creation till certain point. When TMT members are over- identified with the focal organization, its effect on IJV performance becomes negative. This study has important implications for organizational identification theory and joint venture studies.

Cultural distance and the performance of international joint ventures: a critical assessment of model specifications and variable measurement

This study provides a critical summary and assessment of the empirical literature on the relationship between cultural distance and the performance of international joint ventures (IJVs) based on studies published over the period 1993–2008. The existing literature reports inconsistent and largely statistically insignificant findings for the relationship. We add to this literature by analysing some 63 empirical studies of the cultural distance – IJV performance linkage. We further confirm the absence of any consistent and statistically significant linkage, despite strong conceptual arguments for anticipating a strong empirical relationship. We also evaluate different proposed explanations of the weak empirical findings in the literature and find some mixed support for these explanations. We conclude with some suggestions for improving the modelling of the cultural distance – IJV performance relationship.

Advanced Insights Into International Joint Venture Exit Decisions

As a sub-theme of the more general research on success factors of International Joint Ventures (IJVs) many researchers have dealt with and empirically analyzed antecedents and consequences of IJV exit for decades. Reviews of the research stream, however, reveal that findings are mixed and to some extent even contradictory due to application of inappropriate concepts and methodologies. Referring to these reviews and corresponding calls for alternative approaches we apply resource dependence as well as learning theory to develop a more process-related IJV exit framework and propositions, which we test using a multi-method approach yielding 22 in-depth case studies. Based on our empirical findings IJV learning theory is extended by identifying and integrating moderating factors such as IJV performance or exit barriers that frequently hinder the dissolution of IJVs, resulting in continuing an IJV, although the aforementioned theories would predict its termination.

Contracting Institutions and Ownership Structure in International Joint Ventures

This paper examines the role of contracting institutions on a multinational firm's optimal ownership strategy. We develop a model in which both a multinational firm and its local joint venture partner can ex post engage in costly rent-seeking actions to increase their ex ante agreed upon revenue share. We show that the host country's level of contract enforcement and level of judicial favoritism affect the parties' incentives to contribute to the international joint venture. The model allows us to identify testable hypotheses relating these institutional features with the performance and optimal ownership structure of international joint ventures.

Differences in Partners’ Perception and the Performance of German-Chinese Joint Ventures

This study discusses the role of differences in individuals’ perception for research in international management in general, and then explores the extent to which partner firm representatives of German-Chinese Joint Ventures (GCJVs) differ in their perception of various characteristics of their co-operation. In a second step the article suggests how differences in partners’ perceptions of key variables in the management of International Joint Ventures (IJVs) are associated with the perceived performance of such ventures. Using empirical data gathered from 38 General Managers and senior managers representing both sides of 19 GCJVs in the People’s Republic of China (PRC), asymmetries in partners’ perceptions and their association with the perceived performance of the IJV are explored empirically. The results show interesting differences in perception between the German and Chinese partners, and some significant relationships between the differences in perceptions and IJV performance. The key results of the paper are that (1) there are considerable differences in the perceptions of managers representing the different sides of a JV, and (2) that these differences are related to differences in the perception of IJV performance. The paper contributes to research and practice by identifying and providing first empirical data on the magnitude of perceptual differences in IJVs and their potential relevance for the performance of IJVs.

The antecedents and outcome of control in IJVs: A control gap framework

Plenty of researchers have explored the relationship between parent firm control and international joint venture (IJV) performance. However, the conclusions of these researchers are inconsistent. Some studies suggest that total control from foreign parent firms produces better outcomes, while other studies consider that shared control or split control structures result in higher IJV performance. All of these studies argue that a parent firm’s control over an IJV would influence the performance of the IJV. This paper contributes to these debates by exploring the control gap, that is, the difference between desired control and exercised control of a parent firm. Evidence from 80 IJVs in Taiwan indicates that control gaps in the areas of manufacturing, financial, and human resource management have negative impacts on IJV performance. Empirical results also show that the level of a parent firm’s resource contribution to an IJV positively influences the parent firm’s desired control. The extent of a parent firm’s learning intent in marketing and R&D management is also positively linked with the degree of control desired by the parent firm. These findings provide important implications for the study of control structure in IJV management.