Autonomy and effectiveness of equity international joint ventures (IJVs) in China (original) (raw)
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Decision-making Autonomy in UK International Equity Joint Ventures
British Journal of Management, 2003
This paper investigates approaches to decision making in international joint ventures (IJVs) from the perspectives of the transactions cost and resource-based theories of the firm. In particular, the concept of autonomy in decision-making in a sample of UK-European equity joint ventures is examined. The study adopts a multi-method personal interview and self-administered questionnaire approach to examine managerial perceptions of decision-making and autonomy in the parent firms and the joint venture. The findings show that there are differences in the perception of autonomy between each of the parent firms, and between the parent firms and the IJV management. When we unpack the nature of autonomy in detail, it is found that IJV managers have greater degrees of operational autonomy than strategic autonomy and that decision making by IJV managers takes place within the context of constraints set within the IJV's business plan. This confirms the transaction cost theory which posits that key internal markets (for management, technology and capital) will be under parent control and also supports the resource based view that key capabilities are protected under the business plan established by the parent firms. The influence on IJV autonomy of the moderating variables IJV performance and IJV duration are also examined.
Management and Organization Review
Despite the rich set of theories that have developed on international joint ventures (IJVs), little is known about what theoretical criteria senior executives actually incorporate in their judgments of IJV opportunities and partners. Empirical studies have often applied individual theories in a particularistic fashion, rather than recognizing the different theoretical perspectives that boundedly-rational executives may incorporate into their decision models. In this article, we combine decision criteria associated with multiple theories rooted in organizational economics to investigate how top executives process information on IJV opportunities in China. Using an established experimental technique known as policy capturing, we examine how executives cognitively weigh criteria from four prominent theories when making initial assessments of IJVs (i.e., the resource-based view, transaction cost economics, information economics, and real options theory). Our arguments and findings on executives' IJV decision models contribute to decision-making research on alliances and IJVs in China.
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.
Executives' Assessments of International Joint Ventures in China: A Multi-Theoretical Investigation
Management and Organization Review, 2012
Despite the rich set of theories that have developed on international joint ventures (IJVs), little is known about what theoretical criteria senior executives actually incorporate in their judgments of IJV opportunities and partners. Empirical studies have often applied individual theories in a particularistic fashion, rather than recognizing the different theoretical perspectives that boundedly-rational executives may incorporate into their decision models. In this article, we combine decision criteria associated with multiple theories rooted in organizational economics to investigate how top executives process information on IJV opportunities in China. Using an established experimental technique known as policy capturing, we examine how executives cognitively weigh criteria from four prominent theories when making initial assessments of IJVs (i.e., the resource-based view, transaction cost economics, information economics, and real options theory). Our arguments and findings on ex...
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.
Equity ownership in international joint ventures: an empirical analysis of IJVs in Turkey
2005
This study examines the impact of four source country factors on the equity ownership in international joint ventures (IJVs). These factors are exchange rate, cost of borrowing, export capability, and management orientation. Based on a samable at the level of individual investments such as IJVs. This study examines the impact of source country factors on firm's equity ownership in IJVs. Drawing upon the literature, I focus on four factors: exchange rate, cost of borrowing, export capability, and management orientation. Empirically, the sample consists of 8,078 IJVs from 1979 to 1996 in China. The results confirm that equity ownership tends to be higher for parent firms from a source country with strong currency, low cost of borrowing, strong export capability, and high uncertain avoidance. Through extending the scope of investigation to incorporate source country factors that were omitted in previous studies, this study fills a gap in the study of IJVs.
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.
Executives Assessments of International Joint Ventures
Despite the rich set of theories that have developed on international joint ventures (IJVs), little is known about what theoretical criteria senior executives actually incorporate in their judgments of IJV opportunities and partners. Empirical studies have often applied individual theories in a particularistic fashion, rather than recognizing the different theoretical perspectives that boundedly-rational executives may incorporate into their decision models. In this article, we combine decision criteria associated with multiple theories rooted in organizational economics to investigate how top executives process information on IJV opportunities in China. Using an established experimental technique known as policy capturing, we examine how executives cognitively weigh criteria from four prominent theories when making initial assessments of IJVs (i.e., the resource-based view, transaction cost economics, information economics, and real options theory). Our arguments and findings on executives' IJV decision models contribute to decision-making research on alliances and IJVs in China.
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.
Negotiating control and achieving performance in international joint ventures: A conceptual model
Journal of International Management, 2001
Adapting well-established organization theories to international joint ventures (IJVs), this paper develops an overarching theoretical model of the determinants and effects of parent control of IJVs from an interpartner bargaining power perspective. Drawing upon power dependence, transaction costs, and agency theories, we argue that the relative bargaining power between IJV partners serves as the key determinant of control structure, and that control exerts a direct effect on the venture's performance. In addition, government influence and interpartner working relationship are critical factors that complicate the linkage between control and performance but may help to explain past conflicting results. Propositions regarding these relationships are formed for future empirical test, and implications and directions for future research are provided. D