Venture Partners Research Articles

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.

The Gorgon gas development and its environmental commitments

– Chevron has made an important contribution to our knowledge and understanding of the Barrow Island flora and fauna, and to the Australian economy. This knowledge has been primarily founded from the investigations and commitments of joint venture partners associated with the environmental impact assessment for the Gorgon Gas Development.

New exploration opportunities in the offshore Houtman and Abrolhos sub-basins, northern Perth Basin, WA

The 2013 Acreage Release Areas W13-19 and W13-20 in the offshore northern Perth Basin, Western Australia, cover more than 19,000 km2 in parts of the Houtman, Abrolhos, Zeewyck and Gascoyne sub-basins. The Release Areas are located adjacent to WA-481-P, the only active offshore exploration permit in the Perth Basin, granted to joint venture partners Murphy Australia Oil Pty Ltd, Kufpec Australia Pty Ltd and Samsung Oil and Gas Australia Pty Ltd in August 2012. Geoscience Australia recently undertook a regional prospectivity study in the area as part of the Australian Government’s Offshore Energy Security Program, which provides fresh insights into basin evolution and hydrocarbon prospectivity. A sequence stratigraphic framework, based on new biostratigraphic sampling and interpretation, and an updated tectonostratigraphic model, using multiple 1D burial history models for Permian to Cenozoic sequences, have been developed. New geochemical studies of key offshore wells demonstrate that the oil-prone source interval of the Lopingian–Lower Triassic Hovea Member extends regionally offshore into the Abrolhos Sub-basin and potentially as far as the Houtman Sub-basin. This is supported by fluid inclusion data that provide evidence for palaeo-oil columns within Permian reservoirs in wells from the Abrolhos Sub-basin. Oil trapped in fluid inclusions in Houtman-1 can be linked to Jurassic source rocks, suggesting that multiple petroleum systems are effective in the Release Areas. The presence of active petroleum systems is also supported by the results of a recent marine survey. Potential seepage sites on the seafloor over reactivated faults correlate with hydroacoustic flares, pockmarks and dark colored viscous fluids that were observed over the areas. This may indicate an active modern-day petroleum system in the Houtman Sub-basin. Finally, a trap integrity analysis was undertaken to mitigate exploration risks associated with trap failure during Early Cretaceous breakup and provides a predictive approach to prospect assessment. These results provide strong support for the presence of active petroleum systems in the offshore northern Perth Basin and upgrade the prospectivity of the Release Areas.

"Thanks, But No Thanks: Examining Entrepreneurial Optimism, Outside Help, and New Venture Performance"

Using a proprietary dataset of entrepreneurs receiving a government technology award, I explore the impact entrepreneurial optimism can have on the decision to accept external funding , to enter into joint ventures, and on firm performance. Although prior research suggests optimism about the success of a venture might motivate entrepreneurs to seek outside funding and to enter in to joint venture partnerships (with mixed results on performance), how high levels of optimism would instead motivate entrepreneurs to not receive such outside help is explored. Results suggest optimism has a non-linear relationship with accepting outside help, which leads founders to receive less external funding and instead choose to “go it alone.” Further, results show rewards for highly optimistic entrepreneurs, which is contrary to previous findings and has implications for researchers and practitioners alike.

Responses of successful local firms to changing foreign partnership characteristics: a model of dynamic technology management strategies

This article investigates the technological development process in local firms in joint venture partnerships with foreign firms. It takes the perspective of the local firms located in a developing economy and presents a model of dynamic technology management strategies (MDTMS) of local firms for sustained technological development. Based on an analysis of six firms from the rubber products and garment accessories manufacturing in Sri Lanka, it reveals how the level of skills and competence development within the local firm, the potential for technological contribution by the foreign partner firm and the level of autonomy of the local firms are important determinants for shaping technology management strategies. It argues that these successful Sri Lankan firms adopt dynamic technology management strategies because of the evolving nature of the partnership. The proposed model has significant implications for the technology management practices of local firms in developing economies that engage in foreign partnerships.

Dynamics of Joint Ventures between Multinational Enterprises and Local Firms in Emerging Economies: The Case of Financial Services

Emerging economies present the case of rapid changes in markets and institutions. In this context, joint ventures between multinational enterprises (MNEs) and local firms are subject to a gamut of calculations between the partners for arriving at mutually beneficial contractual arrangements. In this note, we analyze two case studies utilizing a combination of the intangible asset theory of MNEs, Williamson’s concepts of asset specificity and holdup, and the resource-based theory of the firm. Both case studies involve financial services, namely, credit cards and insurance products. In these two cases, a large local bank provided the brand name, while the MNEs provided the back-end technical-support, which is a seeming reversal of the normal pattern in emerging markets. From a resource-based theory perspective, at the inception of such joint ventures, investments in relation to specific assets may be small and the possibility of holdup seems remote, but when markets become complex the possibility of holdup increases dramatically. In this kind of context, joint venture partners have to adopt a dynamic perspective and formulate ex ante strategies for addressing the holdup problem, even though static analysis may suggest that there is only limited or no possibility of such holdup. Our analysis brings forth fresh insights on the issue of joint ventures, especially in the context of financial services, in an emerging economy.

Geophysical Characteristics of the Carrapateena Iron-Oxide Copper-Gold Deposit

The Carrapateena iron-oxide copper-gold deposit is located 160km north of Port Augusta, within the eastern margin of the Gawler Craton, South Australia. The deposit was discovered, in 2005, by RMG Services Pty. Ltd. Subsequent exploration by joint venture partner, Teck Australia Pty. Ltd., demonstrated strong similarities with Olympic Dam, albeit at a much smaller scale. In April 2011, Oz Minerals purchased Carrapateena and soon afterwards released an inferred resource for the southern portion of the deposit of 203Mt @ 1.31% Cu, 0.56g/t Au, 270ppm U3O8 and 6g/t Ag. Carrapateena lies beneath approximately 470m of moderately conductive Stuart Shelf sediments, presenting significant technical challenges to exploration. Therefore, geophysical surveys played an important role in both discovery of the deposit and subsequent delineation. Work undertaken by Teck comprised laboratory petrophysical measurements and gravity, aeromagnetic, IP/resistivity/MT, EM and down hole surveys. Results show that Carrapateena lies on the south-western margin of a broad magnetic anomaly of moderate amplitude, being associated with a weak, discrete, ellipsoidal magnetic response, and near-coincident, weak, bullseye gravity high. The mineralised system is also associated with a distinct conductivity anomaly. However, chargeability data are less convincing, being strongly impacted by the thick and conductive nature of the cover sequences. EM surveys did not provide any responses attributable to bedrock conductors and are not recommended for this style of deposit. The observed geophysical responses at Carrapateena are dominated by the presence of Fe-oxides, particularly hematite, with sulphide mineralisation playing a lesser role.

Proton: Its rise, Fall, and Future Prospects

This case focuses on the challenges faced by a Malaysian state-owned automobile manufacturer, Proton. In so doing, it exemplifies the political context in which businesses, both domestic and foreign, operate in Malaysia. What makes Proton unique is its origin as the brainchild of Tun Dr. Mahathir bin Mohammad, Malaysia's fourth Prime Minister. Mahathir was one of the longest-serving leaders in Asia when he resigned in 2003. Over his 22-year reign, Mahathir and his government made several fundamental changes to Malaysia's institutions and his legacy is still reflected in the current social, political and economic institutions. One of the more controversial economic programs he championed was the National Car Project, under which Proton was established. When Mahathir decided to industrialise Malaysia's economy, he did not look to the west for direction, but instead turned to the east — Japan. He adopted the Japanese economic development model that emphasises hands-on government involvement in the economy. To form Proton, he selected Japanese Mitsubishi Motors as the joint venture partner and within two years Proton was rolling out its own vehicles, which in effect were the “rebadged” version of Mitsubishi's Lancer. To ensure there were customers for Proton vehicles, the government raised import tariffs, making it very expensive to buy foreign imports. It also made Proton the official supplier for almost all government passenger vehicles. Under the protection policies of Mahathir, Proton grew to dominate the domestic market. However, it was unable to succeed in obtaining the desired technology from its Japanese partner, or in developing the ability to survive independently and compete effectively, especially in the international market. Part of Proton's weakness stemmed from its social agenda, which favoured bumiputera suppliers, even at the expense of cost and quality efficiency. Proton therefore serves as a good example to illustrate what can happen to a business when it is over-protected, and when business decisions are not made on merit-based principles. Proton's weaknesses were further exposed when the government allowed the establishment of a second national automaker, Perodua, in 1993. The recent free-trade policies adopted by the ASEAN countries, and also by China and India, have put even more pressure on Proton to transform. But the question is how?

Structuration: A position–practice perspective and an illustrative study

Abstract Most prior studies of accounting and control based on structuration theory have given primacy to the analysis of the virtual structures of signification, domination and legitimation. We argue that there is scope for researchers to focus on the more concrete aspects of structuration, such as the configuration and articulation of patterns in relations between agents over time. To do so, we advocate the deployment of a position–practice perspective, which comprises four inter-related elements: praxis, positioning, capabilities and trust. We illustrate use of the perspective in a case study of a joint venture between companies engaged in the production and shipment of oil and petroleum products. The position–practice perspective reveals control governed not by equity ownership, but rather a dialectic of control between joint venture partners whose activities are also affected by accountability to powerful institutions in the wider network. Nevertheless, industry practices are mediated by partner organisations, who rely heavily on trust in systems rather than interpersonal trust. Further research is proposed, using composite research strategies, different levels of analysis, and greater diversity in inter-organisational relationships. The position–practice perspective complements previous structuration studies by more clearly focusing on the praxis of situated agents, their positioning relative to others, the stratified pluralism of institutionalised practices, the consequent role of contradiction in social relations, the recursive cycles of disembedding and reembedding that link the local and global, the concrete and the abstract, and the complex and provisional nature of trust in creating order and coordination.

THE DYNAMICS OF TECHNOLOGY MANAGEMENT PRACTICES IN LOCAL FIRMS IN FOREIGN PARTNERSHIPS IN THE CONTEXT OF A LESS DEVELOPED ECONOMY

This paper investigates the technology management practices and the learning processes for the technological development of local firms in foreign partnerships. It initially notes that the existing literature is focused on the technological benefits to local firms in developing economies from multinational corporations rather than explaining the dynamics of the technology management practices used by local firms who engage in foreign partnerships. This paper also notes a gap in the current literature regarding the technology learning process during partnerships from the perspective of the local partner firms in developing economies. The structural analysis of the data from six case studies of joint venture partner firms in Sri Lanka shows that the technology management practices of local firms need to evolve strategically, based on the partnership characteristics, throughout the life of that partnership. It identifies that the level of skills and capabilities within the local firm, the organizational dominance of the foreign partner firm, clarity of roles in the partnership, and the potential technological contribution from the foreign partner firm are all significant determining factors affecting the choice of dynamic technology management practices by local partner firms.

Cross-Cultural Interviewing and Counseling: Client-Oriented Perspective between Japanese and American Partners

AbstractWhen serving as an attorney for either a Japanese or an American joint venture partner on international engineer-procure-construct contracts on large, complex construction projects, have interviewing and counseling evolved because of the increasing use of client-oriented approaches to alternative dispute resolution (ADR) in this multicultural environment? By using practical experiences from multiple projects spanning nearly two decades, most multicultural elements still exist but have evolved. This practical experience suggests that client-centered approaches enable better client results. The primary cultural changes have been the development of corporate leadership and understanding of the legal milieu on the part of client staffs, which facilitates client-oriented approaches. However, recognition of the cultural differences is still an important part of serving the clients’ needs in ADR efforts.

Country size and tax policy for international joint ventures in an integrated market

We investigate international joint ventures in an integrated market using a two-country model with asymmetric sizes. We show that although the domestic firm in the small country is less efficient, it is possible that the government of the small country imposes a higher tax than that of the large country. Moreover, we show that even if the domestic firm in the large country is less efficient, a joint venture by this firm and the foreign firm could be more productive, and the foreign firm could prefer to form a joint venture partnership with the domestic firm in the large country.

Ecotourism joint ventures between the private sector and communities: An updated analysis of the Torra Conservancy and Damaraland Camp partnership, Namibia

Community-based natural resource management is frequently proposed as a solution to poverty in rural Africa. The extent of Namibia's CBNRM programme's success in terms of joint ventures between the private sector and communities has not been comprehensively analysed. Tangible benefits from joint venture partnerships play an important role in development and poverty reduction, with intangible benefits improving social welfare and local economic development. Questionnaire surveys of staff employed at Damaraland Camp in Torra Conservancy and of households in Torra Conservancy provided insight into the potential benefits of joint ventures. The direct benefit of income from jobs in ecotourism and associated household income diversification opportunities highlight the importance of permanent employment in these remote, rural areas. An analysis of spending patterns, attitudes to tourism, non-governmental organisations and the conservancy illustrated the level of success achieved by joint venture partnerships in terms of poverty reduction, local socio-economic development and changes in attitudes.

Pre-capacity building in loosely-coupled collaborations: Setting the stage for future initiatives

This article examines the benefits and limitations of ‘loosely-coupled’ research collaborations between university faculty and 12 grassroots community-based organisations (CBOs). The authors assert that community-based research projects that develop the knowledge base within CBOs, and can be described as ‘pre-capacity building’ work, can be an important stepping stone to the subsequent development of more formal and strategic capacity-building partnership ventures. However, such projects must be approached carefully with a clear understanding of the ‘threshold dimensions’ that must be met before proceeding with any collaboration. Written as a cautionary tale, the authors identify some of the problems that arise when the threshold stage is poorly executed, and more generally speak to the dangers of initiating even loosely-coupled collaborations in the absence of an explicit and well-established campus commitment to and support for community engagement and partnerships. 
 
 Keywords: Community capacity-building, community-university partnerships, community research, collaboration

Sub‐National Institutional Contingencies, Network Positions, and IJV Partner Selection

abstractThe differences in sub‐national institutions within large and complex emerging economies have been increasingly noted. Drawing on social network theory and the institution‐based view, we argue that two network structural attributes of domestic firms – centrality and structural holes – have distinctive values in different sub‐national regions where institutional contexts differ widely. In addition, these sub‐national institutional contingencies influence the attractiveness of different network attributes to foreign entrants seeking international joint venture (IJV) partners. Specifically, in regions where the degree of marketization is high, centrally positioned domestic firms are more likely to be selected by foreign entrants as IJV partners. In regions where the degree of marketization is low, domestic broker firms are more attractive IJV partners. Results from the electrical and information technology industries in 18 provinces in China largely support our hypotheses.

International Joint Venture Equity Ownership Change:Frequency and Directional Reversals

Changes in equity ownership between international joint venture (IJV) partners over an IJV life-course represent important relational dynamics. We examine each occurrence of equity ownership change for two salient temporal properties: frequency (how often ownership change occurs) and directional reversal (when a partner buys and then sells, or vice versa, equity shares from another partner). Building on the social exchange perspective, we propose that initial equity imbalance between the partners and a partner’s country’s collectivist culture has an imprinting effect on the likelihood of ownership change for both temporal properties. We developed a data set consisting of all equity changes in 200 Japanese automotive suppliers’ IJVs and found support for our hypotheses. Our findings contribute to IJV research by shedding light on temporal aspects of equity ownership change over an IJV’s life course as well as the underlying exchange dynamics and the stability of alliance equity ownership distribution among...

The impact of laws, regulations, and culture on cross-border joint ventures

Both formal (legal) and informal (culture, language, religion) institutions determine the intensity of cross-border joint ventures between one US and one foreign partner. Using a sample of cross-border joint ventures from 105 countries, we investigate the impact of country legal, cultural and business environment factors, industry factors as well as deal specific factors on the intensity of cross-border joint ventures with one US partner. Our results suggest that US firms are more likely to form joint ventures with firms from countries with weaker legal and regulatory environments and with higher cultural, language, and religious disparity from the US. However, compared to mergers between a foreign target and a US bidder, US firms are more likely to form joint ventures with firms from countries with strong laws and regulations, as well as with smaller cultural, language, and religious differences from the US. These findings are consistent with cross-border joint ventures being a “hybrid” organizational form existing in between free-market contracts and firm-like deals such as mergers and acquisitions. Our results further suggest that foreign countries receiving large US foreign direct investments and/or relying less on export and import are associated with higher intensity of cross-border joint ventures. The volume of cross-border joint ventures with US partner is higher for firm from less competitive and/or more politically stable countries. On a firm level, US firms are more likely to form cross-border joint ventures in cases of technology transfers between the joint venture partners, in deals involving partners from unrelated industries or with foreign firms not cross-listed in the US. Overall, the results suggest that cross-border joint ventures are optimal, low cost organizational form mitigating information asymmetries, hold-up costs, and poor contract enforceability, especially in environment with larger market imperfections.

Starkey v South Australia - Authorisation and Delegation Under the Aboriginal Heritage Act 1988 (SA)

In Starkey v South Australia [2011] SASC 164, the Full Court of the Supreme Court of South Australia determined an appeal from a decision on an application for judicial review of a decision of the Minister for Aboriginal Affairs and Reconciliation. The Minister’s decision that was challenged in the judicial review proceedings was a decision to grant an authorisation pursuant to s 23 of the Aboriginal Heritage Act 1988 (SA) a partner in a mining exploration venture and its joint venture partner is the holder of an exploration licence under the Mining Act 1971. The authorisation gave Straits, and others, permission to 'damage, disturb or interfere with' any Aboriginal sites, objects or remains that may exist on Lake Torrens and a portion of Andamooka Island – part of the area the subject of the exploration license. The applicants for judicial review were members of the Kokatha people and the Adnyamathanha people. After the application by Straits for authorisation, the applicants and others had requested that the Minister delegate to them, as the traditional owners of the relevant sites, the power to grant authorisations for the purpose of s 23. The applicants sought orders quashing the Minister’s authorisation under s 23 of the Act and requiring the Minister to delegate her power to give that authorisation. This article offers a critique of the decision.

Is a VC Partnership Greater than the Sum of its Partners?

This paper investigates whether individual venture capitalists have repeatable investment skill and to what extent their skill is impacted by the VC firm where they work. We examine a unique dataset that tracks the performance of individual venture capitalists’ investments across time and as they move between firms. We find evidence of skill and exit style differences even among venture partners investing at the same VC firm at the same time. Furthermore, our estimates suggest the partner’s human capital is two to five times more important than the VC firm’s organizational capital in explaining performance.

The Tarland Catchment Initiative and Its Effect on Stream Water Quality and Macroinvertebrate Indices

The Tarland Catchment Initiative is a partnership venture between researchers, land managers, regulators, and the local community. Its aims are to improve water quality, promote biodiversity, and increase awareness of catchment management. In this study, the effects of buffer strip installations and remediation of a large septic tank effluent were appraised by water physico-chemistry (suspended solids, NO, NH, soluble reactive P) and stream macroinvertebrate indices used by the Scottish Environmental Protection Agency. It was done during before and after interventions over an 8-yr period using a paired catchment approach. Because macroinvertebrate indices were previously shown to respond negatively to suspended solid concentrations in the study area, the installation of buffer strips along the headwaters was expected to improve macroinvertebrate scores. Although water quality (soluble reactive P, NH) improved downstream of the septic tank effluent after remediation, there was no detectable change in macroinvertebrate scores. Buffer strip installations in the headwaters had no measurable effects (beyond possible weak trends) on water quality or macroinvertebrate scores. Either the buffer strips have so far been ineffective or ineffectiveness of assessment methods and sampling frequency and time lags in recovery prevent us detecting reliable effects. To explain and appreciate these constraints on measuring stream recovery, continuous capacity building with land managers and other stakeholders is essential; otherwise, the feasibility of undertaking sufficient management interventions is likely to be compromised and projects deemed unsuccessful.