Determinants of Stability in International Joint Ventures: Evidence from a Developing Country Context

Though the number of international joint ventures (IJVs) from developing countries has grown considerably, little has been reported on their operations and performance. The extant literature is based largely on IJVs from developed countries. To help fill this knowledge gap, this paper examines the determinants of stability from a study of 59 IJVs from developing and developed countries operating in a developing country. A multivariate model investigates the impact of a set firm, managerial and culture related factors on the stability of IJVs. Logistic regression analysis reveals that cooperation and physic distance between partners have significant impact on the stability of an IJV. There were no significant differences between stability rates for IJVs from developing and developed countries, but their determinants varied. The paper discusses the implications and limitations of the study, and identifies areas for further research.

[1]  H. Barkema,et al.  FOREIGN ENTRY, CULTURAL BARRIERS, AND LEARNING , 1996 .

[2]  G. Hamel Competition for competence and interpartner learning within international strategic alliances , 1991 .

[3]  Paul W. Beamish,et al.  The Characteristics and Performance of Korean Joint Ventures in LDCS , 1995 .

[4]  D. G. Morrison On the Interpretation of Discriminant Analysis , 1969 .

[5]  W. Barnes,et al.  Joint Venture Survival in Multinational Corporations. , 1973, American Journal of International Law.

[6]  K. R. Harrigan Strategies for joint ventures , 1985 .

[7]  Stephen Tallman,et al.  A Managerial Decision Model of International Cooperative Venture Formation , 1994 .

[8]  J. I. Reynolds The “pinched shoe” effect of international joint ventures , 1985 .

[9]  Stephen Tallman,et al.  International Cooperative Venture Strategies: Outward Investment and Small Firms from NICs1 , 1994 .

[10]  Stefan Mueller,et al.  International Orientation as a Precondition for Export Success , 1990 .

[11]  D. Lecraw Bargaining Power, Ownership, and Profitability of Transnational Corporations in Developing Countries , 1984 .

[12]  Paul W. Beamish,et al.  Joint Venture Performance In Developing Countries , 1985 .

[13]  Andrew C. Inkpen,et al.  Keeping international joint ventures stable and profitable , 1995 .

[14]  G. Hofstede,et al.  Culture′s Consequences: International Differences in Work-Related Values , 1980 .

[15]  Todd Saxton,et al.  The Effects of Partner and Relationship Characteristics On Alliance Outcomes , 1997 .

[16]  Jiatao Li,et al.  Comparative Business Failures of Foreign-Controlled Firms in the United States , 1991 .

[17]  Harbir Singh,et al.  The Effect of National Culture on the Choice of Entry Mode , 1988 .

[18]  Herman J. Bierens,et al.  Uniform Consistency of Kernel Estimators of a Regression Function under Generalized Conditions , 1983 .

[19]  Robert E. Spekman,et al.  Characteristics of partnership success: Partnership attributes, communication behavior, and conflict resolution techniques , 1994 .

[20]  Charlotte H. Mason,et al.  Collinearity, power, and interpretation of multiple regression analysis. , 1991 .

[21]  J. Killing,et al.  Strategies for joint venture success , 1983 .

[22]  J. M. Geringer,et al.  Strategic Determinants of Partner Selection Criteria in International Joint Ventures , 1991 .

[23]  L. L. Blodgett Partner Contributions as Predictors of Equity Share in International Joint Ventures , 1991 .

[24]  S. Shane THE EFFECT OF NATIONAL CULTURE ON THE CHOICE BETWEEN LICENSING AND DIRECT FOREIGN INVESTMENT , 1994 .

[25]  S. J. Press,et al.  Choosing between Logistic Regression and Discriminant Analysis , 1978 .

[26]  J. Johanson,et al.  THE INTERNATIONALIZATION OF THE FIRM — FOUR SWEDISH CASES , 1975 .

[27]  Louis T. Wells Third World multinationals , 1982 .

[28]  B. Kogut The Stability of Joint Ventures: Reciprocity and Competitive Rivalry , 1989 .

[29]  D. Hosmer,et al.  Applied Logistic Regression , 1991 .

[30]  Yadong Luo,et al.  Business Strategy, Market Structure, and Performance of International Joint Ventures: The Case of Joint Ventures in China 1 , 1995 .

[31]  J. Hennart,et al.  The Impact of Joint Venture Status on the Longevity of Japanese Stakes in U.S. Manufacturing Affiliates , 1998 .

[32]  Benjamin Gomes-Casseres,et al.  Firm Ownership Preferences and Host Government Restrictions: An Integrated Approach , 1990 .

[33]  Robert G. Cooper,et al.  The Impact of Export Strategy on Export Sales Performance , 1985 .

[34]  Anoop Madhok,et al.  Revisiting multinational firms' tolerance for joint ventures: a trust-based approach , 1995 .

[35]  Peter J. Buckley,et al.  A theory of co-operation in international business , 1987 .

[36]  B. Kogut Joint ventures: Theoretical and empirical perspectives , 1988 .

[37]  Bernard Garrette,et al.  Determinants of Success in International Strategic Alliances: Evidence from the Global Aerospace Industry , 1995 .

[38]  Yunus Ali,et al.  Performance of international joint ventures from developing and developed countries: An empirical st , 1998 .

[39]  Freek Vermeulen,et al.  What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures? , 1997 .

[40]  W. C. Kim,et al.  Global Strategy and Multinationals' Entry Mode Choice , 1992 .

[41]  J. M. Geringer,et al.  Control and Performance of International Joint Ventures , 1989 .

[42]  Henry W. Lane,et al.  The Psychic Distance Paradox , 1996 .

[43]  B. Tabachnick,et al.  Using Multivariate Statistics , 1983 .

[44]  Nitin Pangarkar,et al.  Mode of Entry Choice: An Empirical Study of Singaporean Multinationals , 2000 .

[45]  Patrick Clawson,et al.  The East Asian miracle: Economic growth and public policy: By the World Bank. (New York: Oxford University Press for the World Bank, 1993. 389 pp. $19.95, paper.) , 1995 .

[46]  Ming Zeng,et al.  International Joint Venture Instability: A Critique of Previous Research, A Reconceptualization, and Directions for Future Research , 1999 .

[47]  D. Lecraw Outward Direct Investment by Indonesian Firms: Motivation and Effects , 1993 .

[48]  A. Coughlan,et al.  International Market Entry and Expansion via Independent or Integrated Channels of Distribution , 1987 .

[49]  Andrew C. Inkpen,et al.  KNOWLEDGE, BARGAINING POWER, AND THE INSTABILITY OF INTERNATIONAL JOINT VENTURES , 1997 .

[50]  J. M. Geringer,et al.  Measuring Performance of International Joint Ventures , 1991 .

[51]  S. Park,et al.  The Effect of National Culture, Organizational Complementarity, and Economic Motivation on Joint Venture Dissolution , 1997 .

[52]  G. Hofstede,et al.  Cultures and Organizations: Software of the Mind , 1991 .

[53]  Arvind Parkhe Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances , 1991 .

[54]  Jiatao Li Foreign entry and survival: effects of strategic choices on performance in international markets , 1995 .

[55]  Developing policy responses to cultural differences , 1978 .

[56]  K. Glaister,et al.  Management–performance relationships in UK joint ventures , 1998 .

[57]  L. L. Blodgett Factors in the instability of international joint ventures : an event history analysis , 1992 .

[58]  Lucia Piscitello,et al.  The Emergence of Corporate International Networks for the Accumulation of Dispersed Technological Capabilities , 1999 .