Asymmetric information and joint venture performance: theory and evidence for domestic and international joint ventures

The increased number of perspectives on joint ventures (JVs) raises important issues for theory development on interfirm collaboration. In this paper, we bring together two key theoretical perspectives on joint ventures—the asymmetric information perspective and the indigestibility view. On a theoretical level, we focus on the relationship between these two different explanations of joint ventures. We also present new evidence on the firm valuation effects of JVs in domestic and international investment contexts. The findings lend support to the asymmetric information perspective on resource combination through joint ventures. Copyright © 2000 John Wiley & Sons, Ltd.     

Compositional gaps and downward spirals in international joint venture management groups

We argue that compositional gaps in international joint venture (IJV) management groups, along parent company lines, will accentuate distinct managerial coalitions. Such gaps can occur on dimensions of observable demography, less apparent demography, or psychological characteristics. While compositional gaps in IJV management groups can provide the basis for healthy substantive conflict, such gaps—particularly if they are large—also tend to induce relationship conflict and heighten substantive conflict beyond its beneficial range. This can set off a downward spiral of relationship conflict, substantive conflict, and behavioral disintegration in the group. These harmful group processes further interact reciprocally with any tensions that might exist between the IJV parents, engendering a second downward spiral. Our model has implications for the performance of international joint ventures, and it serves as a foundation for designing interventions to avoid the downward spirals we portray. Copyright © 2001 John Wiley & Sons, Ltd.     

Dialectical tensions and path dependence in international joint venture evolution and termination

This paper identifies how dialectical tensions influence the conflicts in and unplanned terminations of international joint venture (IJV) relationships. The findings from case studies of two Finnish-Chinese JVs show how initial tensions and institutional imprints set the IJV processes in motion; how critical junctures influence perception of the IJV relationship and its evolution; and how a lack of efficient communication, interlinks between dialectical tensions, and insufficient movement of trust between cultural, organizational, and individual levels in the relationship lock in action patterns of confrontation which lead to the termination of the IJV. In essence, this study contributes to international business research by explaining the path-dependent nature of dialectical tensions in the evolution and survival of cross-cultural JVs.     

Perceived fairness,decision control,and commitment in international joint venture management teams

Previous research examining the effectiveness of international joint ventures (IJVs) has focused on differences in the backgrounds and bargaining power of IJV parent firms, while little attention has been given to the IJV itself. This study takes a different perspective by examining the relationship between IJV parent firms and the IJV. Specifically, we examine how IJV and parent involvement in strategic decision‐making influences the IJV management team's commitment to the IJV and to the parent firms. We hypothesize that the IJV management team tends to be more committed to the IJV than to the parent firms, and that there is a strong positive relationship between procedural justice, strategic decision control, and organizational commitment. A field study involving 51 IJVs supported our hypotheses. We discuss the implications of organizational commitment and procedural justice for managing IJVs. Copyright © 2002 John Wiley & Sons, Ltd.     

Types and functions of social relationships in the organizing of an international joint venture

This paper examines the use of social relationships in the organizing of a business network in the case of an international joint venture (IJV) developing over time. The organizing process and the multicultural setting of the international joint venture emphasize the actions of and interactions between individuals from various organizations. The IJV-managers' use of their social relationships in business organizing is explored through analysis of narratives of IJV-managers in a longitudinal single case to provide empirically grounded theory. From the in-depth interviews with IJV-managers the business relationships are identified as characterized by four possible levels of interpersonal relationships whose type influences the functions of the relationships and visa versa. One business relationship may contain only one or many of these interpersonal levels and an effective business relationship contains the appropriate interpersonal level for the business issue at hand.     

Do multiple parents help or hinder international joint venture performance? The mediating roles of contract completeness and partner cooperation

We develop a mediation model in which the number of partners in a joint venture affects venture performance through contract completeness and partner cooperation. In a sample of 224 international joint ventures, we find that the number of partners is negatively related to venture contract completeness and partner cooperation, both of which are positively related to joint venture performance. The number of partners is inversely related to joint venture performance and the relationship is mediated by contract completeness and partner cooperation. We discuss theoretical and managerial implications for joint venture research and practice. Copyright © 2007 John Wiley & Sons, Ltd.     

Contract,cooperation, and performance in international joint ventures

This study examines how contract, cooperation, and performance are associated with one another within international joint ventures (IJVs). We argue that contract and cooperation are not substitutes but complements in relation to IJV performance. An IJV contract provides an institutional framework guiding the course of cooperation, while cooperation overcomes the adaptive limits of contracts. Our analysis of 293 IJVs in a dynamic market demonstrates that previous cooperation bolsters contractual adaptability, which in turn nurtures current cooperation between the same partners. We find that contract completeness and cooperation drive IJV performance both independently and interactively. When contracts are more complete, cooperation contributes more to performance. Contract and cooperation differ in their quadratic effects such that the contribution of contract completeness to performance declines as completeness increases but the contribution of cooperation remains linear. Copyright © 2002 John Wiley & Sons, Ltd.     

Mimetic entry and bandwagon effect: the rise and decline of international equity joint venture in China

The rise and decline of foreign entry strategies in transition economies is an important yet largely overlooked issue in the literature. This study is a step toward filling this gap by examining how mimetic entry within reference groups and the emergence of a competing strategy affect the bandwagon phenomenon of a dominant strategy in the context of China, where international equity joint ventures (EJVs) used to be a dominant entry strategy among foreign firms in the 1990s. Findings from a sample of 1,123 EJVs formed in China's non-restricted industries from 1990 to 2003 show that the impact of home and host-country industry effects are not symmetric between the EJV rise and decline periods. Cross-border merger and acquisition (M&A) as a competing strategy has an important impact during the EJV decline period but not the rise period. The interactive effects between EJV and M&A strategies occur only in the host-country industries. We discuss such results and offer suggestions for future research. Copyright © 2007 John Wiley & Sons, Ltd.     

Absorptive capacity,learning, and performance in international joint ventures

This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.     

Antecedents and performance consequences of learning success in international joint ventures

This study examined a sample of organizations involved in international joint ventures, (IJVs) in Malaysia. Drawing upon the resource based view of the firm this paper investigates the antecedents and performance consequences of learning success of foreign partners in IJVs. Data was analysed using two-stage least squares regression (2SLS). Results suggest that a learning orientation, IJV partner mutual dependency and management control, have a positive effect upon the learning success. Results also suggest that organizations with higher levels of learning orientation and learning success have higher levels of business performance. The findings imply that foreign partners in IJVs that are successful in achieving their learning goals, and improving their knowledge, will be winners in terms of improving their business performance.     

A theory of joint venture life-cycles

In this paper we provide a dynamic theory of joint venture life cycle that relies on synergy, organisational learning and moral hazard. We demonstrate that depending on parameter values the outcome may involve any one of the following: stable joint venture formation, joint venture formation followed by breakdown, or Cournot competition in all the periods. We also provide some interesting welfare results.     

Influences on Sino-Western joint venture negotiations

This paper attempts to increase the reader's knowledge of the influences present when negotiating in China. The current environment of Sino-Western joint venture (JV) negotiations is examined, and negotiating suggestions resulting from this examination are presented. The paper, the result of the author's research in China in 1987–1989, posits that the major influences on Sino-Western JV negotiations are the ideological and theoretical foundations for such JVs, their history, the problems they experience, and the political, economic, governmental, and cultural contexts of negotiations. The paper's importance lies in two areas: it contributes to the literature on the international transfer of capital and technology, and it provides valuable information to Western firms and individuals who consider entering into JV negotiations in China.     

Product diversification in international joint ventures: performance implications in an emerging market

This study extends product diversification research to a new organizational form (IJV) and a new environmental context (emerging market). It explores the extent to which product relatedness with both foreign and local parents affects IJV performance as perceived by venture managers. After controlling for relevant variables, analysis of the data containing 134 IJVs in China validates our major premise: the relatedness of an IJV's products with that of its foreign and local parents is positively associated with its performance. An IJV maintaining bilateral related diversification (i.e., with both parents) performs better than a venture maintaining a unilateral related linkage (i.e., with one parent), which in turn outperforms an IJV which is unrelated to either parent. When resource complementarity or goal congruity between parents is higher, there is a stronger positive relationship between product relatedness and IJV performance. When structural opportunities are fewer or institutional deterrence is higher, there is a weaker positive relationship between product relatedness and IJV performance. Copyright © 2002 John Wiley & Sons, Ltd.     

Option to acquire or divest a joint venture

This paper develops a model for assessing options in joint ventures. The model is used specifically to examine the option to acquire or divest a joint venture, both in the case where the acquisition/divestiture price is specified ex ante in the initial contract and in the case where the price is to be negotiated ex post. The results derived from the model show how the value of the option and each partner's pay‐off from the venture vary with the structure of the option and how the presence of the option may affect the structuring of the joint venture. The main theoretical insights are stated in 12 potentially testable propositions, and possible ways to operationalize some of the propositions for empirical testing are also explored. Copyright © 2000 John Wiley & Sons, Ltd.     

Joint venture stability and cooperation: Direct, indirect and contingent effects of resource complementarity and trust

Despite the increased use of JVs and other forms of alliances, research shows that most collaborative arrangements end in failure due to relationship and resource sharing problems. We note that extant research and practice in this area has tended to emphasize structural and partner selection issues, often at the expense of the relationship and resource development processes which promote ongoing stability and cooperation. This paper presents a view of JV formation and success grounded in the Resource-Advantage (R-A) theory of competition. Our results illustrated the distinct effects of resource complementarity and trust upon JV stability and cooperation. Further, we found that trust was most influential in newer JVs, while the presence of resource complementarity was more critical in older ventures. For firms with greater (less) JV experience, resource complementarity (trust) between the partners was more critical for attaining JV outcomes.     

Board involvement in international joint ventures

The last two decades have witnessed substantial scholarly interest in corporate boards, yet little research has been devoted to boards of international joint ventures (IJVs). We combine the corporate governance and alliance governance literatures in order to study this important ex post governance mechanism for IJVs. We identify a fundamental tension inherent in IJVs, which arises from the unique features of this organizational form and influences the level of involvement by their boards. International joint ventures are hybrid organizational forms that can require administrative control to facilitate monitoring and coordinated adaptation in the presence of exchange hazards. At the same time, the fact that IJVs operate in different host countries can make it efficient to delegate authority to local management for certain collaborations. In investigating the determinants of IJV board involvement, we therefore examine characteristics of IJVs that reflect this underlying tension. We conclude that board involvement reflects efficiency considerations in individual ventures, and the administrative control provided by boards is an important dimension of IJV governance. Copyright © 2013 John Wiley & Sons, Ltd.     

Board representation in international joint ventures

Research summary : Relatively little attention has been paid to boards in international joint ventures (IJVs), and the composition of these boards in particular. We examine the determinants of foreign partners' representation on IJV boards in order to advance our knowledge of this facet of IJV governance. We argue that a foreign partner's representation on the IJV board is related to its equity contribution. However, we hypothesize that this relationship is moderated by IJV and host country characteristics that affect the importance of the internal and external roles IJV boards serve. These results provide insights into the conditions under which a partner might wish to secure greater board representation for its level of equity, or utilize less board representation than might be suggested by its equity level alone. Managerial summary : The functioning and composition of corporate boards have long been seen as critical to managers and shareholders alike. In contrast, the boards of IJVs have been relatively neglected. We advance our knowledge of this important facet of IJV governance. Specifically, we highlight the importance of two roles (i.e., an internal and external role) that IJV boards and directors fulfill. We find that the importance of these internal and external roles of boards determines whether a foreign partner might wish to secure greater board representation for its level of equity, or utilize less board representation than might be suggested by its equity level alone. Our results provide novel insights that can help managers structure their IJV boards. Copyright © 2016 John Wiley & Sons, Ltd.     

如何搞好合资企业的财务管理

财务管理是企业一项举足轻重的工作，只有通过财务管理，才能全面控制好企业生产经营和资本经营。而在合资企业中．由于合资各方利益关系的不同，财务管理成为合资企业合作的焦点。只有正确认识和搞好合资企业的财务管理与财务监督，才能使合资各方和股东利益最大化，促进企业经济效益的稳步提高。     

Are joint venture partners more opportunistic in a more volatile environment?

This study examines how joint venture partners' opportunism is influenced by environmental volatility in a drastically changing emerging economy. Building on transaction cost and information‐processing theories, we develop the hypothesis that opportunism increases to cope with industry structural instability, information unverifiability, and law unenforceability, the three interrelated yet distinct characteristics that jointly describe environmental volatility in an emerging economy. Our analysis of 188 foreign joint ventures in an emerging market suggests that opportunism increases with information unverifiability and law unenforceability. These relationships are even stronger when joint ventures depend more on the host country environment, but weaker when joint ventures operate in faster‐growing industries. Finally, opportunism is found to play a mediating role in the relationship between environmental volatility and joint venture performance. Copyright © 2007 John Wiley & Sons, Ltd.