Survival Of International Joint Ventures Research Articles

Partner Substitutability and International Joint Venture Termination: A Partner Interdependence View

Previous studies have largely focused on the decisions of multinational partners when investigating the stability of cross- border interorganizational relationships, but ignored the importance of local partners, assuming that multinational firms often have certain advantage over local firms. From an interdependence perspective, we argue that for international joint ventures (IJVs), post-formation alliances activities by both multinational and local partners, which make the focal IJV substitutable, may lead to the instability and termination of the focal IJV. Moreover, post- formation alliances activities by both multinational and local partners can accelerate the IJV termination. However, when IJVs involving higher levels of technology transfer complexity, the mutual dependence of multinational and local partners increases and thus the negative effects of their post-formation alliances activities on IJV survival diminish. We test our theory using data on 841 IJVs formed by 763 local firms and 714 multinational firms from 1990 to 2018 in a multi-country context. Our results show supports to our ideas.

How Do International Joint Ventures Build Legitimacy Effectively in Emerging Economies? CSR, Political Ties, or Both?

Legitimacy has been identified as an important factor influencing the survival of international joint ventures (IJVs). Yet empirical studies exploring IJV strategies for gaining post-formation legitimacy are scarce. This study examines how IJVs accumulate legitimacy after their formation in China. We identify two non-market strategies, namely corporate social responsibility (CSR) and political ties, and compare their effects on gaining two types of legitimacy: political legitimacy and market legitimacy. Data obtained from senior and middle IJV managers in China lends empirical support for the direct effects of CSR and political ties on IJV legitimacy-building. Surprisingly, we find that CSR has a stronger effect on gaining both political and market legitimacy than political ties. Furthermore, both political and market legitimacy contribute to IJVs’ performance.

How does local partners network embeddedness affect international joint venture survival in different subnational contexts?

Do local partners' network attributes affect the survival of high-tech international joint ventures (IJV)? How does the effect of network attributes vary in different subnational institutional environments? While the classic economic explanation for IJV formation and subsequent performance draws from the resource-based view (RBV), we add the relational dimension to explain that IJV survival may be affected by local partners’ relation-specific assets within the local network. We test the effect of the local partners’ network attributes as calculated by UCINET (centrality, network status, and structural hole position) on IJV survival. We additionally assert that this relationship is moderated by subnational institutional heterogeneity. Using our sample of 125 IJV dyadic pairs of US multinational enterprises (MNEs) operating in high-tech industries and their local partners in China, we find partial support for our claims.

Partner resource asymmetry and IJV survival

Drawing on the resource-based view (RBV) and learning perspective in the context of international joint ventures (IJVs), we attend to equivocal results regarding the relationship between partner resource asymmetry and IJV survival by examining different types of resource asymmetry (property-based versus knowledge-based) and by considering the interplay between resource asymmetry and ownership strategy. In a sample of 905 Japanese IJVs worldwide, we found that IJV partners’ industry knowledge asymmetry had a negative effect on an IJV’s survival likelihood. However, this negative effect could be reduced by the level of equity controlled by the partner who had more industry knowledge over the other partner. Our findings highlight the importance to consider the nature of resources and ownership strategy simultaneously in structuring IJVs.

When do MNCs fail to learn from prior failure experience?

AbstractDo multinational corporations (MNCs) learn from their prior failures in international joint ventures (IJVs)? When does decision makers’ cognitive inability hinder MNCs from learning through their prior failure experiences? In the context of IJV survival in subsequent IJV entries, this study compares predictions made from two distinct theoretical perspectives, both of which belong to the behavioural school in strategy literature. According to the performance feedback perspective, MNCs may effectively learn from their prior failure experiences gained in familiar decision‐making contexts. On the other hand, according to the cognitive bias perspective, MNCs may not be able to effectively learn from their prior failure experiences if they inaccurately interpret the causes of their prior failures. The results provide partial support for the notion that MNC decision makers may not be able to effectively learn from their prior failures because of their cognitive biases. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.

Local Partners’ Network Effect on IJV Longevity In Different Institutional Contexts

Do local partner’s network attributes affect the survival and longevity of international joint ventures (IJV) resulting from collaborative foreign market entry? And how does the effect of network attributes vary in different institutional environments? While the classic economic explanation for IJV’s formation and subsequent performance draws from the resource-based view, we add the relational dimension to explain that IJV survival and longevity might be affected by local partners’ relation-specific assets in the local network. Our setting for research is American MNEs in high-tech industries entering into an emerging economy (China) and a developed economy (Canada). We test the effect of RBV explanation (resource complementarity) and local partner network attributes calculated by UCINET (centrality, structural hole position, and network status) on the longevity of IJV. We show that the relationship is moderated by institutional difference between the home and host country.

Modes of acquiring host-country experience and performance of international joint ventures in Japan

Drawing upon organizational learning literature, we examine how different modes of acquiring host-country experience (HCE) affect international joint ventures (IJV) performance. Our study suggests that HCE improves IJV performance by reducing the liabilities of foreignness and cross-national collaboration confronting foreign firms. However, due to the difficulty of learning from experience, HCE may not always benefit IJV performance and may even harm it, depending on how it was accumulated. Our analysis of IJV survival and growth using data on IJVs in Japan between 1985 and 2000 supports this argument. Our findings have practical implications for leveraging HCE and suggest that the performance benefits of HCE should not be overstated.

Country risk, national cultural differences between partners and survival of international joint ventures in Brazil

This article aims to identify the main and interaction effects of two country-level variables, namely national distance and country risk, on the survival of international joint ventures in emerging markets. Research hypotheses predicting the negative impact of national distance and country risk on survival of international joint ventures are formulated in this article. These research hypotheses are examined in a sample of 234 international joint ventures formed in Brazil between 1973 and 2004. These international joint ventures were subjected to an event history analysis over a period of time ranging from 1973 to 2006. The empirical results show that large national cultural differences between local and foreign partners increase the instability of international joint ventures, whereas the survival of these alliances does not seem to be affected either by the economic and political uncertainty of Brazil. Furthermore, the national distance between local and foreign partners has effects on survival that are variable according to the life cycle of international joint ventures.

How do country risk and national cultural differences between partners affect the survival of international alliances in emerging countries? Longitudinal analysis of 165 international joint ventures in Brazil 1974 to 2005

This article aims at identifying the individual and joint impact of two « country-level variables », namely national distance and country risk, on the survival of international joint ventures in emerging countries. Research hypotheses predicting the negative impact of national distance and country risk on survival are formulated in this article. These research hypotheses are tested in a sample of 165 international joint ventures that were formed in Brazil between 1974 and 2003. These joint ventures were subjected to an event history analysis over a period of time ranging from 1974 to 2005. The empirical results show that the intercultural dynamics increases the instability of international joint ventures whereas the survival of these alliances does not seem to be affected by the economic and political uncertainty of Brazil. Furthermore, the national distance between local and foreign partners has effects on survival that are variable according to the life cycle of international joint ventures.

Growth and Survival of International Joint Ventures: An External-Internal Legitimacy Perspective

The authors examine the growth and survival of international joint ventures (IJVs) from a legitimacy perspective. In a sample of 291 Sino-Japanese joint ventures in China, they found that Chinese parent age, Chinese parent size, and IJV industry relatedness to either parent had a positive effect on IJV growth and/or survival. However, IJV industry relatedness to both parents led to lower rates of IJV growth and survival. The findings highlight the importance for IJVs to obtain both external and internal legitimacy, as well as the difficulties IJVs face in acquiring internal legitimacy from both parents simultaneously.

Environmental uncertainty and survival of international joint ventures: the case of political and economic risk in emerging countries

AbstractThis article examines the survival of international joint ventures formed in emerging countries. More precisely, our research consisted in studying the survival rate of international joint ventures, and relating it to country risk. A survival analysis was applied to a sample of 210 international joint ventures that were formed during the year 1996 by foreign partners originating from the European Union and local partners from different emerging countries. This survival analysis was used together with a Cox proportional hazards model testing for the impact of different country risk variables (included in the model as time‐varying constructs) on the hazard rate of international joint ventures. Time‐related variations were observed in their termination rate (i.e., inverted single U variations) and their hazard rate (i.e., curvilinear distribution with honeymoon effect). Concerning the impact of country risk on joint venture survival, the findings provided only a partial confirmation of this impact: the link between country risk and joint venture survival is only supported empirically for the overall score of economic risk. A negative impact was observed and it may be interpreted as follows: a high economic uncertainty is associated with a hazard rate of joint ventures that decreases with time, and vice versa.

Equity control and the survival of international joint ventures: a contingency approach

This study attends to equivocal results regarding the relationship between equity control and international joint venture (IJV) performance by proposing a transaction-cost-based contingency framework. We examined the moderating effects of asset specificity and uncertainty on the relationship between foreign parent equity control and IJV survival in an empirical setting of Japanese IJVs in 12 Asian countries in the 1985–1996 period. Our findings suggest that in the presence of high asset specificity, high levels of foreign equity control can lead to higher IJV survival rates. Furthermore, we find that social knowledge can serve as a substitute for equity control in IJVs and contribute to higher IJV survival rates.

Effect of equity ownership on the survival of international joint ventures

AbstractThis note extends transaction cost analysis of international joint ventures (IJVs) to include explicitly the effect of equity. It challenges the common practice of treating all foreign investments with between 5 percent and 95 percent equity as IJVs. A fine‐grained analysis of the role of foreign equity ownership on the survival of 12,984 overseas subsidiaries confirms a declining, nonlinear, and asymmetrical relationship between equity and mortality in overseas subsidiaries. While investments involving small ownership levels (<20%) have very high mortality rates, those with high ownership levels (>80%) have mortality rates comparable to that of wholly owned subsidiaries. Implications for research, practice, and policy are discussed. Copyright © 2003 John Wiley & Sons, Ltd.

What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures?

An international joint venture implies that a firm has to cooperate with a partner with a different cultural background. In this study, hypotheses about which differences in national culture are most disruptive for international joint ventures were developed and tested using Hofstede's five dimensions. The study focused on how these dimensions affect the survival of international joint ventures, as well as their incidence relative to wholly owned subsidiaries. The hypotheses were tested on longitudinal data about 828 foreign entries of twenty-five Dutch multinational in seventy-two countries between 1966 and 1994. The database, which spans almost three decades, was also used to provide new evidence on a key assumption of Hofstede's work: that cultural values are stable over time.