Negotiating control and achieving performance in international joint ventures: A conceptual model (original) (raw)
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Control and Performance in International Joint Ventures
Organization Science, 1997
T he incidence of international joint ventures and alliances seems to be increasing as a means to achieving strategic flexibility. Although IJVs have been the subject of much "theorizing" they remain empirically under-researched. This paper seeks to increase knowledge of IJVs by focusing on the relationship between partner specific resources, equity share, control (over specific resources or activities) and performance. The paper develops a distinction between control and equity demonstrating that control consists of several specific dimensions. Of particular interest is the application of a model of bargaining power and its role in determining equity and the distinction between transaction cost economics and firm specific resources and their relation to control and equity.
Antecedents and Effects of Parent Control in International Joint Ventures
Journal of Management Studies, 2001
Using a sample of 90 US-China manufacturing joint ventures, this study empirically tested a grounded-theory model of the antecedents and the effects of the structure of parent management control in international joint ventures. The results suggest that competitive and cooperative dynamics occur simultaneously between joint venture partners. On one hand, the relative bargaining power between the partners, derived from the negotiation context and from contributing critical resources to the venture, respectively, is a determining factor in management control; and the level of operational control exercised by a partner over the venture has a positive effect on the extent to which this partner's strategic objectives are achieved. On the other hand, the quality of the interpartner working relationship was found to have a strong, positive relationship with the achievement of strategic objectives for both partners.
The control dimensions in international joint ventures: influencing factors
The aim of this paper is to gain insight into the various control practices. This study investigated how partners exercise control over their international joint venture (IJV) relationships. This also provided a practical insight into how IJV partners can mange considerable tension and conflict yet still achieve their strategic objectives. In the first section, we outline some of the basic concepts of IJV control and give the rationale for its increasing relevance when facing cross-cultural joint ventures. We continue by addressing various aspects of IJV control, including a typology of control mechanisms. In the third and fourth sections, we discuss the methodology applied, and give an overview of the empirical fundamentals in terms of two cases, both IJV Australian/Indian dyads. In the fifth section, we discuss our three main findings. We have identified various sets of goal attainments in the dyads and two distinct types of IJVs, and found that control mechanisms are compounded, interrelated and dynamic. In the sixth section, we propose a conceptual model with a dual parent perspective of control and satisfaction in IJV's. The paper ends with conclusions, implications, limitations and our proposal for further research.
HANS MJOEN AND STEPHEN TALLMAN Control and Performance in Intemational Joint Ventures Introduction
2017
The authors examine the meaning of control in international joint ventures (IJVs) and the relationships of potential means of control in such organizations to the performance satisfaction of the foreign partner. They propose a conceptual model that provides both a traditional ownership-focused internalization perspective on those issues and an integrated approach combining a broader transaction cost interpretation of control with a resource input-based bargaining power model. A set of simultaneous structural equations with endogenous explanatory variables provides multiple possible paths from various resource and power inputs through different means of control to perceived performance satisfaction. In such a model, intermediate variables act both as dependent and independent variables; thus the complex theoretical interactions of the variables are modeled more comprehensively and realistically than in single-equation models. To test the model and compare the theoretical relationship...
Control and Performance of International Joint Ventures
Journal of International Business Studies, 1989
Ontario Abstrct. Control is a critical concept for successful management and performance of international joint ventures (IJUs). This paper reviews and synthesizes prior studies addressing the conceptualization and operationalization of control within IJVs, as well as the IJV control-performance relationship. The paper also presents a new conceptualization of IJV control, as well as a conceptual framework for studying control of IJVs. THE IMPORTANCE OF CONTROL IN INTERNATIONAL JOINT VENTURES With continued globalization of the world's economies, joint ventures (JVs) have become an important element of many firms' international strategies. These ventures involve two or more legally distinct organizations (the parents), each of which actively participates in the decisionmaking activities of the jointly owned entity [Geringer 1988]. If at least one parent organization is headquartered outside the JV's country of operation, or if the venture has a significant level of operations in more than one country, then it is considered to be an international joint venture (IJV). An alternative to wholly-owned subsidiaries, IJVs are commonly used by firms as a means of competing within multidomestic or global competitive arenas [Porter & Fuller 1986; Harrigan 1988]. Increasingly, they are perceived as strategic weapons, as one of the elements of an organization's business units network [Harrigan 1987]. Joint ventures also represent an *J. Michael Geringer (Ph.D., University of Washington) is an Assistant Professor of Policy at the University of Western Ontario. Besides the Journal of International Business Studies, his articles have appeared in such journals as the Columbia Journal of World Business, Business Quarterly, and the Strategic Management Journal. His research interests include formation and management of international alliances, MNE diversification strategies, and strategic management of technology. **Louis Hebert (M.Sc., University of Quebec at Trois Rivieres) is a Ph.D. candidate in Business Policy at the University of Western Ontario. His current research interests center on the strategic management and control of technology, particularly within international joint ventures. This research was sponsored by the Plan for Excellence, School of Business, University of Western Ontario, and the Quebec Fonds pour la formation de chercheurs et l'aide a la recherche (F.C.A.R.). Of the many people who provided contributions to this research, the authors would like to acknowledge Paul Beamish, Rod White, Colette Frayne, and the anonymous reviewers.
Parent contribution and organizational control in international joint ventures
Strategic Management Journal, 2009
Organizational control scholars have recently noted how control use is not singular in organizations, but rather, different types of control are used to achieve different purposes. In international joint ventures (IJVs), we suggest that output, process, and social control are exercised by both foreign and local parent firms. We then hypothesize that a parent firm's usage of these three control types is influenced by its resource contributions. Using a sample of IJVs in China, we find that property-based contribution is linked with output and process control, and knowledge-based contribution is related to process and social control. The results also show differences in control practices between foreign and local parent firms. The findings provide important implications for the design and implementation of control systems in IJVs.
Academy of Management Journal, 1994
This article reports a comparative case study of four joint ventures between partners from the United States and the People's Republic of China. The bargaining power of potential partners affects the structure of management control in a joint venture, which affects venture performance. Several informal control mechanisms interacting with formal control structure and influencing performance are identified. We also investigated the joint ventures' evolution over time. An integrative model of management control in joint ventures is presented. International joint ventures are a rapidly growing organizational form that has received increasing interest from researchers in a variety of academic disciplines. Despite this attention, academic understanding of joint ventures is still limited in scope and in depth. Previous studies have reported high failure and instability rates among joint ventures (Franko, 1971; Harrigan, 1986; Kogut, 1989; Levine & Byrne, 1986), and the factors predictive of successful venture performance remain unclear (Geringer & Hebert, 1991; Parkhe, 1993a). In addition, the empirical studies that have been done to test existing conceptual models have either produced contradictory results or been difficult to compare because of differences in how variables were measured. This study adopts an interpartner negotiations perspective on joint venture formation. We envisioned joint ventures as mixed motive games between partners who cooperate and compete simultaneously (Lax & Sebenius, 1986; Hamel, Doz, & Prahalad, 1989). According to the negotiations perspective, the relative bargaining power of each joint venture partner shapes the pattern of management control that a venture adopts. In addition, parent control is hypothesized to be a critical factor that determines performance. Although previous researchers have empirically investigated the first rela-We would like to thank Martin Kilduff, James Thomas, and two anonymous reviewers for this journal for their insightful comments on the earlier versions of this article.
A Meta-analysis of Factors Leading to Management Control in International Joint Ventures
Journal of International Management, 2014
In international joint ventures (IJVs), management control exerted by parent firms is fundamental since it can direct employees' activities to strive for the overall goals, to safeguard parent firms' idiosyncratic investments and to decrease opportunistic behaviors. Using a meta-analytic approach, we investigate the main factors influencing management control in IJVs. A search of the published and unpublished literature uncovered 45 articles that yielded 329 reported correlations between the factors and management control with a total sample size of 15,252 IJVs. Results indicate that the factors can be ordered in the following way in terms of the average size of their association with management control: resource contribution; equity share; trust; and strategic importance to the IJVs. Three moderators including operating country (China versus other countries), industry type (manufacturing versus service) and management control type (formal control versus informal control) were proposed to examine the heterogeneity issue. Our meta-analysis suggests that there is a bias of the empirical studies given that a majority of the samples are IJVs operating in the Chinese manufacturing industry, which indicates that results of this meta-analysis may not be representative of all IJVs and that future empirical research should include IJVs in other countries and in other industries.