Trust-performance relationship in international joint ventures: the moderating roles of structural mechanisms

2017 ◽  
Vol 32 (7) ◽  
pp. 962-973 ◽  
Author(s):  
Tahir Ali ◽  
Saba Khalid
Keyword(s):  
Transaction Cost ◽  
Joint Ventures ◽  
International Joint Ventures ◽  
Equation Modeling ◽  
Moderating Effects ◽  
Content Type ◽  
Resource Complementarity ◽  
International Joint ◽  
Ijv Performance ◽  
Structural Mechanisms

Purpose This study aims to investigate the relationship between trust and performance in international joint ventures (IJVs) with the moderating effects of the structural mechanisms from transaction cost approach. Design/methodology/approach Using web-survey, data are collected from 89 IJVs of Northern European firms in Asia, Europe and America. Empirical data are analyzed with structural equation modeling and estimates moderating effects of symmetric dependence, symmetric equity share and resource complementarity. Findings The findings offer some interesting insights for transaction cost and the social exchange theory. This study demonstrates that a symmetric equity share between IJV partners does not moderate the trust–performance relationship, while a symmetric dependence and resource complementarity between partners effect positively. Therefore, trust takes on greater importance in enhancing IJV performance under symmetric dependence and resource complementarity and symmetric equity share between IJV partners deprecates the importance of equity distribution. Practical implications A symmetric dependence prevents the deceit from either partner in trusting relationships. Further, a trustful relationship enhances IJV performance regardless of the equity share in IJVs. IJVs with asymmetric equity share can also be successful, provided that IJV partners develop inter-partner trust. Originality/value The extant research has not examined how the trust–performance relationship is contingent on structural mechanisms of IJVs that transaction cost economics deem necessary to prevent opportunistic behavior. Three structural mechanisms of symmetric dependence, symmetric equity share and resource complementarity moderate the trust–performance relationship in IJVs.

Demystifying the role of internal dynamics in the path of innovative competitiveness: a serial mediation model of international joint ventures

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vijita Aggarwal ◽  
Madhavi Kapoor
Keyword(s):  
Knowledge Transfer ◽  
Absorptive Capacity ◽  
Joint Ventures ◽  
International Joint Ventures ◽  
Equation Modeling ◽  
Internal Dynamics ◽  
Content Type ◽  
Organizational Competencies ◽  
International Joint

PurposeThe study proposes and evaluates a parsimonious research framework by integrating the major strategic theories related to an international firm's internal dynamics. This research's essence lies in the proposition that organizational competencies, knowledge resources and processes, absorptive capacity and innovativeness form the underlying base for sustainable competitive advantage in this dynamic world.Design/methodology/approachA cross-sectional explanatory research design is adopted. Using the quantitative data obtained from the sample of Indian international joint ventures (IJVs), partial least squares structural equation modeling (PLS-SEM) is deployed to confirm the proposed relationships among the research constructs. Finally, qualitative interviews helped in triangulating the primary survey's results.FindingsA well-established relationship between knowledge transfer and innovation is negated by the Indian IJVs' data, which is delved deeper with cross-industry qualitative analysis. The novel hierarchical model with multiple mediations has nurtured quite exciting results for the business world with some significant theoretical and managerial implications.Research limitations/implicationsThis study has investigated the nexus between multi-dimensional organizational competencies, knowledge transfer, absorptive capacity and venture innovativeness in the context of Indian IJVs. It has emphasized the role of internal dynamics in cross-cultural joint ventures to attain sustainable competitiveness through strategic and technological efficiency.Originality/valueThe study has addressed the specific research gap of under-investigation of dynamic capabilities and sustainable competitiveness in international joint ventures. It has investigated a complex model of multiple mediations, yielding interesting quantitative results with qualitative insights; which is rare to match in literature.

scholarly journals International Joint Ventures and Shareholder Value Creation: Evidence from Manufacturing and Non-manufacturing Sectors

2001 ◽  
Vol 26 (4) ◽  
pp. 21-34
Author(s):  
Hemant Merchant
Keyword(s):  
Capital Markets ◽  
Joint Ventures ◽  
Empirical Studies ◽  
Shareholder Value ◽  
International Joint Ventures ◽  
Actual Performance ◽  
Ex Post ◽  
International Joint ◽  
Ijv Performance ◽  
The Impact

Numerous empirical studies have suggested that the economic performance of international joint ventures (IJVs) is modest, at best. This suggestion may be inaccurate, however, since the studies' findings are based on ex post managerial perceptions of IJV performance that are found to be biased. Stated differently, there is a need to investigate IJV performance from ex ante “external* perspective—that of capital markets. Consequently, this study investigates the extent to which IJVformation announcements increase the shareholder value pf participating firms. Despite the merits of engaging a capital markets' perspective, it is necessary to investigate the extent to which capital markets are informationally ‘efflcient’- particularly given persistent doubts about whether capital markets really are as efficient as is widely accepted. Hence, this study compares IJV&' expected performance with their actual performance that is reported in other empirical studies. This study engages the event-study methodology to examine the impact of IJV formation announcements on the shareholder value of IJV parents, and tries to circumvent the methodology's principal limitations in doing so. Based on a sample of more than 500 IJVs, the study's findings indicate participation in IJVs increases parents' shareholder value by an average of approximately one per cent, albeit this figure varies across industry sectors (manufacturing; non-manufacturing) and firm size (large; small). Shareholder value is created for about 50 per cent Of firms in the sample. Moreover, the study's findings suggest that capital markets are informationally efficient

scholarly journals Explaining alternative termination modes of international joint ventures

2020 ◽  
Vol 37 (6) ◽  
pp. 1121-1153
Author(s):  
Palitha Konara ◽  
Zita Stone ◽  
Alex Mohr
Keyword(s):  
Transaction Cost ◽  
Environmental Risk ◽  
Transaction Cost Economics ◽  
International Joint Ventures ◽  
People’S Republic Of China ◽  
People's Republic Of China ◽  
Content Type ◽  
Republic Of China ◽  
Related Risk ◽  
International Joint

PurposeThe authors combine options logic with transaction cost economics to explain why firms maintain, divest or buy out their international joint ventures (IJVs). It is suggested that a decline in environmental risk and higher partner-related risk makes a firm more likely to acquire an IJV but less likely to divest an IJV. The study also investigates how IJV age moderates the effects of a decline in environmental risk and higher partner-related risk.Design/methodology/approachThe study employs competing risks analyses to examine the drivers of different termination outcomes using a dataset consisting of 459 IJVs in the People's Republic of China, of which 110 were either acquired or divested by their foreign parent.FindingsThe study finds that changes in environmental risk and partner-related risk affect how firms terminate their IJVs in the People's Republic of China. Specifically, the authors find that the effect of exogenous and endogenous risk are more pronounced for the acquisition of IJVs than for the divestment of IJVs.Research limitations/implicationsThe study contributes to international marketing research by complementing options logic with transaction cost economics to provide a theoretical explanation of the different ways in which IJVs in the People's Republic of China are terminated.Practical implicationsIJVs continue to be an important yet often unstable method to serve international markets. Our findings increase managers' awareness of the effect that two important sources of risk may have on the termination of IJVs in the People's Republic of China.Originality/valueThe study provides novel insights into the effect that changes in exogenous and endogenous risk have on a firm's choice of termination mode drawing on novel data on the different ways in which foreign firms have terminated their IJVs in the Peoples' Republic of China.

Unravelling the role of guanxi in the formation and management of international joint ventures – a systematic review of the literature

2021 ◽  
Vol 31 (1) ◽  
pp. 103-126
Author(s):  
Xiaoli Zhao ◽  
Pavel Castka
Keyword(s):  
Decision Making ◽  
Joint Ventures ◽  
International Joint Ventures ◽  
Control Mechanisms ◽  
Managerial Decision ◽  
Content Type ◽  
Institutional Void ◽  
International Joint ◽  
Business In China

Purpose The formation of international joint ventures (IJVs) is one of the prevalent approaches for Western companies to conduct business in China. Yet, doing business in China is difficult for many firms, partially because of the institutional voids that are created by weak formal institutions. The paper aims to focus on the role of guanxi (an informal institution and a company capability that fills such institutional void) in the formation and management of IJVs. Design/methodology/approach A systematic literature review on the role of guanxi in IJV formation and management is conducted based on papers published in top international business journals between 2005 and 2020 – in total, 47 papers are included in the review. Findings The findings of the study are presented in four themes, namely, the role of guanxi as social capital in IJV formation, the role of trust in guanxi-based IJVs, the role of control mechanisms in balancing high reliance on trust in guanxi-based IJVs and the role of guanxi in managing inconsistencies in the regulatory environment. The analysis also reveals that guanxi has a positive effect on the development of IJVs if control between the parent firms is well balanced; otherwise, guanxi can trigger opportunism and leads to failures. Practical implications The study unravels how guanxi leads to successful outcomes in IJV formation and management, which assist managers who operate IJVs with their decision-making. Originality/value To the best of the authors’ knowledge, no previous paper has critically analysed the literature on IJVs using a guanxi perspective at micro (personal), meso (business) and (macro) governmental levels. This approach allows for providing more nuanced view of the role of guanxi in the formation and management of IJVs and aligns more closely with managerial decision-making.

Trust, guanxi, and cooperation: a study on partner opportunism in Chinese joint-venture manufacturing

2018 ◽  
Vol 33 (1) ◽  
pp. 95-106 ◽  
Author(s):  
Jinjie Xue ◽  
Shaokai Lu ◽  
Benshan Shi ◽  
Haiping Zheng
Keyword(s):  
Conceptual Model ◽  
Joint Ventures ◽  
Structural Equation ◽  
Joint Venture ◽  
Management Practice ◽  
Negative Relationship ◽  
Equation Modeling ◽  
Moderating Effects ◽  
Content Type ◽  
Industrial Sectors

Purpose The purpose of this paper is to provide a conceptual model for examining the effects of trust (competence trust, goodwill trust) and cooperation on partner opportunism and for exploring the moderating effects of guanxi on the relationships among trust, cooperation and opportunism in joint ventures. Design/methodology/approach The sample for this paper comprises 981 manufacturing joint ventures from various industrial sectors. A total of 354 valid questionnaires were collected, representing a 36 per cent response rate. The conceptual model is tested with structural equation modeling adopting AMOS software. Findings The empirical findings indicate that both competence trust and goodwill trust reduce partner opportunism in a joint venture through fostering cooperation. Competence trust also exerts significant influence on preventing opportunism, whereas opportunistic behavior is not greatly affected by goodwill trust. Additionally, the results reveal that guanxi helps strengthen the negative relationship between cooperation and opportunism. Originality value This paper makes a threefold contribution: First, it investigates empirically the direct influence of two types of trust on partner opportunism. Second, it tests indirect influence of trust on partner opportunism through the path of cooperation. Third, it explores the moderating effects of guanxi in relationships on trust, cooperation and partner opportunism. Implications offers suggestions for management practice to reduce partner opportunism in joint-venture manufacturing.

Appointing a general manager in Sino‐US joint ventures

2007 ◽  
Vol 15 (2) ◽  
pp. 152-165
Author(s):  
Xiaohua Lin
Keyword(s):  
Joint Ventures ◽  
Small Sample Size ◽  
Small Sample ◽  
International Joint Ventures ◽  
Cross Sectional ◽  
General Manager ◽  
Content Type ◽  
Ijv Performance ◽  
The Right ◽  
American Partner

PurposeThe purpose of this study is to examine performance implications of general manager appointment in Sino‐US joint ventures, specifically whether there is a difference in outcomes when the appointment is made by the Chinese or American partner.Design/methodology/approachUsing a structured questionnaire, data were collected from 94 managers representing US and Chinese partners in 67 international joint ventures (IJVs) based in China.FindingsThe results show that, when the general manager is Chinese rather than American, there is heightened conflict on daily personnel management issues, but not on strategic and contract issues, and the overall levels of partner satisfaction and relationship commitment decrease as well.Research limitations/implicationsThe research was based on small sample size and cross‐sectional design.Originality/valueThis article focuses on the general manager appointment as a control mechanism and explores its link to IJV performance. It identifies daily/personnel issues as a source of conflicts that are associated with the right to appoint the IJV general manager.

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