Management International Strategic Alliances
by
Dan Li
  • LAST MODIFIED: 31 August 2015
  • DOI: 10.1093/obo/9780199846740-0063

Introduction

International strategic alliance is typically defined as a collaborative arrangement between firms headquartered in different countries. Partnering firms remain legally independent after the formation of alliance and the alliance relationship is relatively enduring. International strategic alliances can be categorized along multiple dimensions. First, based on the type of activities of collaboration, international strategic alliances can be categorized into licensing, franchising, management service, supply, research and development, manufacturing, marketing, and others. An international strategic alliance can engage in one activity or a combination of activities. Second, based on the number of partners involved, an international strategic alliance can be bilateral or multilateral; the existing body of literature on international strategic alliances has largely focused on bilateral alliances. Third, based on the nationalities involved, an international strategic alliance can be broadly defined as a collaborative arrangement between firms one of which is headquartered outside the country of alliance; therefore an international strategic alliance can be categorized as home-home, home-host, or home-third country alliance. The majority of existing studies are about international strategic alliances formed between a foreign firm and a local firm (i.e., home-host). Fourth, based on the involvement of equity investment, international strategic alliances can be categorized into non-equity-based and equity-based alliances. Non-equity-based international strategic alliances are also called contract-based; equity-based international strategic alliances are often referred to as international joint ventures. While the intention is to be as comprehensive as possible, this bibliography cannot cover all articles because of the multidisciplinary nature of the literature on international strategic alliances and the enormous research output on this organizational form.

Formation

The existing literature has examined two important aspects of the formation of international strategic alliances: motivations of formation (which is closely related to partner selection) and ownership structure.

Motivations and Partner Selection

Motivations of international strategic alliances have been discussed extensively in the management literature. The first motivation is to access resources or knowledge that partnering firms otherwise would not have access to. As an international strategic alliance is formed between firms from different countries, the important role of institutional and cultural differences between partnering firms has been emphasized. Hitt, et al. 2000 reports that, for foreign developed market firms, the typical motivations are, through local partners, to gain access to local markets, knowledge about local institutional environments (including culture) and local customers, relationships with local government, and legitimacy. For local emerging market firms, the motivations include accesses to advanced managerial and technological knowledge, financial resources, and opportunities to learn about international markets. Li, et al. 2008 and Roy and Oliver 2009 show that host countries’ legal environment can affect firms’ partner section for their international strategic alliances. Vasudeva, et al. 2013 suggests that firms’ evaluation of prospective partners’ social and technological value actually varies with their national institutional structures on corporatism. The second motivation is to achieve the economy of scale by engaging in horizontal alliances and/or securing input supplies; the third motivation is to share risks and costs involved in international expansion into new and/or unstable geographic markets. Porter and Fuller 1986 is one of the early articles explicitly discussing the competition implications of international strategic alliances through scaling; Brouthers, et al. 1995 stresses similar benefits of scaling and risk sharing through international strategic alliances. The fourth motivation is to shape the competition landscape in the global market. Yu, et al. 2013 argues that competitive intensity between two rival multinational enterprises at the global level can actually affect the likelihood of them forming international strategic alliances in any host country. Firms often have concurrent motivations when pursing international strategic alliances as part of their international expansion/operation. Depending on the motivation, partner selection criteria for international strategic alliances vary. The existing research emphasizes the importance of complementary resources for partner selection; the classic article Geringer 1991 suggests the emphasis of different partner selection criteria is subject to firm-specific and local market factors.

  • Brouthers, Keith D., Lance Eliot Brouthers, and Timothy J. Wilkinson. “Strategic Alliances: Choose Your Partners.” Long Range Planning 28.3 (1995): 18–25.

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    This paper is known for its recommendation of the 4Cs for partner selection in international strategic alliances: complementary skills, cooperative cultures, compatible goals, and commensurate levels of risks.

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  • Geringer, J. Michael. “Strategic Determinants of Partner Selection Criteria in International Joint Ventures.” Journal of International Business Studies 22.1 (1991): 41–62.

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    This study suggests that the relative importance of specific partner selection criteria is related to the critical success factors of an international joint venture’s competitive environment, and to statistic and dynamic dimensions of the parent firm’s position along these success dimensions.

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  • Hitt, Michael A., M. Tina Dacin, Edward Levitas, Jean-Luc Arregle, and Anca Borza. “Partner Selection in Emerging and Developed Market Contexts: Resource-Based and Organizational Learning Perspectives.” Academy of Management Journal 43.3 (2000): 449–467.

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    This research finds that, when selecting partners for international strategic alliances, emerging market firms emphasize financial assets, technical capabilities, intangible assets, and willingness to share expertise, while developed market firms emphasize unique competencies and local market knowledge/access.

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  • Li, Dan, Lorraine Eden, Michael A. Hitt, and Duane Ireland. “Friends, Acquaintances or Strangers? Partner Selection in R&D Alliances.” Academy of Management Journal 51.2 (2008): 315–334.

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    This study demonstrates that partner selection for international R&D alliances is influenced by the intellectual property protection situation in the host environment and the simultaneous decisions of alliance governance structure and scope.

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  • Porter, Michael E., and M. B. Fuller. “Coalitions and Global Strategy.” In Competition in Global Industries. Edited by Michael E. Porter, 315–343. Boston: Harvard Business School, 1986.

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    This is one of the early articles on competition implications of international alliances.

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  • Roy, Jean-Paul, and Christine Oliver. “International Joint Venture Partner Selection: The Role of the Host-Country Legal Environment.” Journal of International Business Studies 40 (2009): 779–801.

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    This study investigates how the host country’s rule of law may affect partner selection for international joint ventures and how appropriation and coordination concerns mediate the relationship.

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  • Vasudeva, Gurneeta, Jennifer W. Spencer, and Hildy J. Teegen. “Bringing the Institutional Context Back In: A Cross-National Comparison of Alliance Partner Selection and Knowledge Acquisition.” Organization Science 24 (2013): 39–338.

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    This study tests how cross-country variation in corporatist institutional structures can affect firms’ evaluation of their prospective partners’ social value and technological value, and how knowledge acquisition in international strategic alliances can be influenced by that.

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  • Yu, Tieying, Mohan Subramaniam, and Albert A. Cannella Jr. “Competing Globally, Allying Locally: Alliances between Global Rivals and Host-Country Factors.” Journal of International Business Studies 44 (2013): 117–137.

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    This research shows that competitive intensity between two rival firms at the global level can positively affect their formation of alliances in any host country and that host country context factors such as government restrictions, cultural distance, and mutual importance of market can moderate the relationship.

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Ownership Structure

Degree of foreign ownership in an international strategic alliance is subject to the amount of foreign investment involved, country preference, cultural distance between partner countries, planned alliance duration, etc. Blodgett 1992 suggests that the type of expertise contribution influences how much control a partnering firm has in its international strategic alliances and that host governments play a significant role in partnering firms’ ownership decisions. Chen, et al. 2002 focuses on the balance between risk and return at the level of international strategic alliance and posits that the specific evaluation and balance at the alliance level affect foreign ownership control. Hagedoorn and Narula 1996 studies the industry pattern of governance structures of international strategic alliances, while Jung, et al. 2008 examines their patterns across countries. Pan 2002 investigates the home country factors such as currency and export capability and their effects on foreign ownership in international strategic alliances. Yet mixed results still exist. While many studies based on transaction cost theory suggest that cultural distance discourages foreign ownership, Pan 1996 reports that cultural distance is positively related to foreign ownership in joint ventures in China. Assche and Schwartz 2013 argues that contracting institutions in the host country (specifically contract enforcement and judicial favoritism) affects partner firms’ decisions on ownership structure in international joint ventures.

  • Assche, Ari Van, and Galina A. Schwartz. “Contracting Institutions and Ownership Structure in International Joint Ventures.” Journal of Development Economics 103 (2013): 124–132.

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    This paper investigates how contract enforcement and judicial favoritism in the host country can affect joint venture partners’ decisions on ownership structure.

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  • Blodgett, Linda Longfellow. “Partner Contributions as Predictors of Equity Share in International Joint Ventures.” Journal of International Business Studies 22.1 (1992): 63–78.

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    This study shows that the type of expertise (technology, marketing, etc.) a partnering firm contributes to its international joint venture affects the amount of control the firm has. Governments’ intervention can halt/reverse the “natural” decisions of ownership.

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  • Chen, Haiyang, Michael Y. Hu, and Patrick S. Hu. “Ownership Strategy of Multinationals from ASEAN: The Case of Their Investment in Sino-Foreign Joint Ventures.” Management International Review 42.3 (2002): 309–326.

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    This study argues that foreign ownership in an international joint venture is determined by the balance between risk and return of the venture. Specifically, this study finds that amount of foreign investment, planned venture duration, and venture location affect foreign ownership.

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  • Hagedoorn, John, and Rajneesh Narula. “Choosing Organizational Modes of Strategic Technology Partnering: International Sectoral Differences.” Journal of International Business Studies 27.2 (1996): 265–284.

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    This study shows that equity-based governance structures are disproportionately represented in relatively mature industries and contractual-based structures are more prevalent in high-tech industries. The distribution of alliances across industries is more even in developed countries than it is in developing countries.

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  • Jung, Jae C., Paul W. Beamish, and Anthony Goerzen. “FDI Ownership Strategy: A Japanese-US MNE Comparison.” Management International Review 48.5 (2008): 491–524.

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    This research compares ownership preference between US and Japanese investors and finds that Japanese firms have a stronger preference for international joint ventures than US firms.

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  • Pan, Yigang. “Influences on Foreign Equity Ownership Level in Joint Ventures in China.” Journal of International Business Studies 27.1 (1996): 1–26.

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    This paper draws from Dunning’s OLI paradigm and examines a number of factors influencing foreign ownership in international joint ventures—e.g., investment amount, duration, cultural distance, etc.—and the varying influence for US and Japanese investors.

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  • Pan, Yigang. “Equity Ownership in International Joint Ventures: The Impact of Source Country Factors.” Journal of International Business Studies 32.2 (2002): 375–384.

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    This study examines the impact of investing country’s exchange rate, cost of borrowing, export capability, and management orientation on the ownership level in international joint ventures in China.

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Management and Control

As partnering firms of an international strategic alliance are autonomous organizations and legally independent from each other, conflicts and uncertainties are inevitable. First, executives and managers leading an international strategic alliance are under the influence of parent firms with varying national and/or organizational cultures and strategic goals and therefore experience role confusion and ambiguity. Gong, et al. 2001 finds that more control by the foreign parent and more complete contract can help reduce role conflict and ambiguity for alliance executives; Shenkar and Zeira 1992 reports that international joint venture CEOs’ tenure and education and home-host cultural difference can influence the conflicts experienced. Second, as a new organization, it is critical to maintain strategic control of international strategic alliance by parent firms; ownership and human resource mechanisms are important in achieving the goal of control. Geringer and Frayne 1990 offers detailed explanation of the human resource management techniques for international joint ventures; Huang and Chiu 2014 finds that there is a gap between desired control and exercised control and the resultant control gap negatively affects alliance performance. Third, host government plays a critical role in setting the stage for the operation of an international strategic alliance and can intervene in the collaboration arrangement and process by firms. The meta-analysis Liu, et al. 2014 shows a significant role played by government in determining foreign parents’ control of international strategic alliances. Fourth, as this bibliography will later cover, trust/social capital plays a critical role in influencing the performance of international strategic alliance. Parkhe 1998 offers a detailed discussion on different components of trust in international strategic alliances and how trust can be produced through different mechanisms. Currall and Inkpen 2002 discusses trust at individual, group, and firm levels and offers suggestions in measuring them. Johnson, et al. 1996 examines partnering firms’ sensitivity to cultural differences and their trust building between US and Japanese firms.

  • Currall, Steven C., and Andrew C. Inkpen. “A Multilevel Approach to Trust in Joint Ventures.” Journal of International Business Studies 33.3 (2002): 479–495.

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    This research conceptualizes trust in international joint ventures at the person, group, and firm levels and proposes operational measures for each.

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  • Geringer, J. Michael, and Colette A. Frayne. “Human Resource Management and International Joint Venture Control: A Parent Company Perspective.” Management International Review 30 (1990): 103–120.

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    This paper discusses the importance of strategic control in international joint ventures and four key areas of human resource management techniques as control mechanisms in international joint ventures—employee recruiting and staffing, training and development, performance appraisals, and compensation and reward systems.

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  • Gong, Yaping, Oded Shenkar, Yaodong Luo, and Mee-Kau Nyaw. “Role Conflict and Ambiguity of CEOs in International Joint Ventures: A Transaction Cost Perspective.” Journal of Applied Psychology 86.1 (2001): 764–773.

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    This study reports that role conflict and ambiguity of CEOs in international joint ventures are lower when the contract is more complete, when foreign parent firm has more control than local parent, and when cultural distance between parents is high.

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  • Huang, Ming-Chang, and Ya-Ping Chiu. “The Antecedents and Outcome of Controls in IJVs: A Control Gap Framework.” Asia Pacific Journal of Management 31 (2014): 245–269.

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    This research points out that the existence of a control gap experienced by parent firms can damage the performance of international joint venture. Parent firms’ contribution and learning intent contribute to the desired control by parents.

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  • Johnson, Jean L., John B. Cullen, Tomoaki Sakano, and Hideyuki Takenouchi. “Setting the Stage for Trust and Strategic Integration in Japanese-U.S. Cooperative Alliances.” Journal of International Business Studies 27.5 (1996): 981–1004.

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    This study shows that partner cultural sensitivity contributes to trust building for partnering firms of international strategic alliances. Complementarity contributes to trust for US partners, but not Japanese partners; similarity is influential for the trust by Japanese firms but not for US firms.

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  • Liu, Xiaoyu, Harrie Vredenburg, and Piers Steel. “A Meta-analysis of Factors Leading to Management Control in International Joint Ventures.” Journal of International Management 20 (2014): 219–236.

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    A meta-analysis on management control in international joint ventures.

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  • Parkhe, Arvind. “Understanding Trust in International Alliances.” Journal of World Business 33.3 (1998): 219–240.

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    This paper discusses three components of trust—psychological, sociological and economic—and intercultural differences in the notion of trust. The paper then discusses various mechanisms—process-based, characteristic-based, and institution-based—for trust production in international alliances.

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  • Shenkar, Oded, and Yoram Zeira. “Role Conflict and Role Ambiguity of Chief Executive Officers in International Joint Ventures.” Journal of International Business Studies 23.1 (1992): 55–75.

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    Role conflict of CEOs of international joint ventures is lower when there are more parent-firms and CEOs have longer tenures. Role ambiguity of these CEOs is lower when CEOs have more education years/when parent differences in power-distance and masculinity are small/when parent differences in individualism and uncertainty avoidance are large.

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Outcomes

The literature has studied outcomes of international strategic alliances along several dimensions: learning by firms and alliances, survival and longevity of alliances, economic performance (objective and subjective evaluation) by firms and alliances, and stock market valuation.

Learning and Learning Race

Learning is an important motivation for the formation of international strategic alliances; naturally, there have been numerous studies on determinants of learning as an outcome. Learning intent, knowledge tacitness, absorptive capacity, sender willingness, social capital, partner cultural difference, and facilitating organizational mechanisms have been reported as influential in learning and knowledge transfer in international strategic alliances. The case study Hamel 1991 represents one of the early efforts in understanding and developing theory for inter-partner learning. Inkpen and Dinur 1998 shows that firms’ attention and partner interaction are critical for successful transfer of tacit knowledge; Dhanaraj, et al. 2004 also stresses the challenges in transferring tacit knowledge between partners and argue that relational embeddedness can assist the process of transfer. Lane, et al. 2001 and Simonin 2004 further emphasizes the importance of learning intent and absorptive capacity on the effectiveness of learning between international strategic alliance partners. The literature has also recognized that learning can be asymmetric and tip the balance of bargaining power, and potentially trigger learning race. Hamel 1991 and Tsang 1999 offer a detailed and explicit discussion on the asymmetric nature of learning by international strategic alliance partners.

  • Dhanaraj, Charles, Marjorie A. Lyles, H. Kevin Steensma, and Laszlo Tihanyi. “Managing Tacit and Explicit Knowledge Transfer in IJVs: The Role of Relational Embeddedness and the Impact on Performance.” Journal of International Business Studies 35 (2004): 428–442.

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    This study shows that relational embeddedness between international joint venture partners contributes to the transfer of tacit knowledge; tacit learning assists explicit learning, and these effects vary between young and mature international joint ventures.

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  • Hamel, Gary. “Competition for Competence and Interpartner Learning within International Strategic Alliances.” Strategic Management Journal 12 (1991): 83–103.

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    Based on case studies, this research develops a theory of inter-partner learning. Main propositions include: learning by alliance partners is asymmetric; learning asymmetry changes relative bargaining power for partners.

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  • Inkpen, Andrew, and Adva Dinur. “Knowledge Management Processes and International Joint Ventures.” Organization Science 9.4 (1998): 454–468.

    DOI: 10.1287/orsc.9.4.454Save Citation »Export Citation »E-mail Citation »

    This paper focuses on transfer of tacit knowledge in international joint ventures. Case analyses reveal that firms’ attention, and interaction and strategic relationships between partnering firms affect the transfer of tacit knowledge.

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  • Lane, Peter J., Jane E. Salk, and Marjorie A. Lyles. “Absorptive Capacity, Learning, and Performance in International Joint Ventures.” Strategic Management Journal 22 (2001): 1139–1161.

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    This study offers a detailed examination of three components of absorptive capacity—knowledge understanding, assimilation, and application—through international joint ventures and their effects on the ventures’ learning and performance.

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  • Simonin, Bernard L. “An Empirical Investigation of the Process of Knowledge Transfer in International Strategic Alliances.” Journal of International Business Studies 35 (2004): 407–427.

    DOI: 10.1057/palgrave.jibs.8400091Save Citation »Export Citation »E-mail Citation »

    Develops and tests a comprehensive model of learning in international strategic alliances. It illustrates the effects of organizational motivation (learning intent), learning capacity (resource-, incentive-, and cognitive-based capacity), and learning hindrance (tacitness and knowledge ambiguity) on knowledge transfer and the moderating roles of organizational culture, firm size, and alliance form.

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  • Tsang, Eric W. K. “A Preliminary Typology of Learning in International Strategic Alliances.” Journal of World Business 34.3 (1999): 211–229.

    DOI: 10.1016/S1090-9516(99)00016-4Save Citation »Export Citation »E-mail Citation »

    This study classifies the types of learning in international strategic alliances (empirical setting: Sino-Singapore joint ventures): asymmetrical, non-mutual, competitive, and noncompetitive.

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Longevity/Instability

Several factors have been reported contributing to the longevity and stability/instability of international strategic alliances. First, cultural differences can cause ambiguity in collaborative relationships, leading to conflicts and even termination of international strategic alliances. Lane and Beamish 1990 acknowledges the influential effects of partner selection, governance design, and relationship in managing international strategic alliances and further attributes the root cause of collaboration difficulty to inter-partner cultural and behavioral differences. Barkema and Vermeulen 1997 shows that certain cultural dimensions are more influential than others in contributing to inter-partner conflicts. Second, partner differences in terms of strategic directions, management practices, and organization routines are detrimental to the stability of international strategic alliances. Parkhe 1991 categorizes inter-partner diversity into resource-based and cultural/behavioral-based and argues that diversity from complementary resources is beneficial and serves as the foundation for alliance formation; yet diversity from cultural and behavioral differences can damage survival of international strategic alliances. Third, learning race interrupts the balance of bargaining power between partnering firms and can lead to renegotiation and dissolution of international strategic alliances. Inkpen and Beamish 1997 suggests that, once learning takes place, relative bargaining power and dependency between partners will inevitably begin to change, leading to instability of international strategic alliances. Fourth, certain combinations of partner nationalities are more stable than others. Makino and Beamish 1998 finds that the traditional international joint venture between a foreign and a local firm suffer from a much higher termination rate than that formed between two firms from the same home country entering into a host market. Fifth, the relationship between foreign parental control (typically through equity ownership) and international joint venture survival is inconclusive. Positive relationships between foreign equity and venture survival are reported in Delios and Beamish 2004; yet imbalance in management control (may or may not be correlate with ownership control) can lead to conflicts as shown in Steensma and Lyles 2000.

  • Barkema, Harry G., and Freek Vermeulen. “What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures?” Journal of International Business Studies 28.4 (1997): 845–864.

    DOI: 10.1057/palgrave.jibs.8490122Save Citation »Export Citation »E-mail Citation »

    This study shows that some of Hofstede’s cultural dimensions (uncertainty avoidance and long-term orientation) are more disruptive to international joint ventures than others (power distance, individualism, and masculinity).

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  • Delios, Andrew, and Paul W. Beamish. “Joint Venture Performance Revisited: Japanese Foreign Subsidiaries Worldwide.” Management International Review 44.1 (2004): 69–91.

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    This research employs a very large sample of foreign subsidiaries and shows that majority-owned joint ventures had a 50% higher survival rate than co- and minority-owned joint ventures.

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  • Inkpen, Andrew C., and Paul W. Beamish. “Knowledge, Bargaining Power, and the Instability of International Joint Ventures.” Academy of Management Review 22.1 (1997): 177–202.

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    This paper develops a conceptual framework of instability of international joint ventures. The authors argue that when knowledge and skills are acquired, dependency between partnering firms is reduced and ultimately eliminated, resulting in shifts in bargaining power and in turn instability of joint ventures.

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  • Lane, Henry W., and Paul W. Beamish. “Cross-Cultural Cooperative Behavior in Joint Ventures in LDCs.” Management International Review Special Issue (1990): 87–102.

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    This paper discusses partner selection, organization design, and relationship management in international strategic alliances and emphasizes the root cause of collaborative problems due to cultural and behavior differences.

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  • Makino, Shige, and Paul W. Beamish. “Performance and Survival of Joint Ventures with Non-conventional Ownership Structures.” Journal of International Business Studies 29.4 (1998): 797–818.

    DOI: 10.1057/palgrave.jibs.8490054Save Citation »Export Citation »E-mail Citation »

    While the literature has typically focused on traditional international joint venture (i.e., between a foreign and a local firm), this paper identifies other types of joint ventures (home-home, affiliated, involvement of third country firm) and compares the performance and survival of these types of ventures.

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  • Parkhe, Arvind. “Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances.” Journal of International Business Studies 22.4 (1991): 59–601.

    DOI: 10.1057/palgrave.jibs.8490315Save Citation »Export Citation »E-mail Citation »

    Proposes two types of diversities in international strategic alliances. Type 1 diversity refers to complementary resources by partners: a foundation for alliance formation. Type II diversity refers to differences in partners’ societal culture/national context/corporate culture/strategic directions/management practices and organization, which are negatively related to longevity of international strategic alliances.

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  • Steensma, H. Kevin, and Marjorie A. Lyles. “Explaining IJV Survival in a Transitional Economy through Social Exchange and Knowledge-Based Perspectives.” Strategic Management Journal 21.8 (2000): 831–851.

    DOI: 10.1002/1097-0266(200008)21:8<831::AID-SMJ123>3.0.CO;2-HSave Citation »Export Citation »E-mail Citation »

    This study finds that an imbalance in management control between parent leads to parental conflicts and contribute to international joint venture failure. Yet, an imbalance in ownership control structure does not contribute to venture failure.

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Economic Performance

Although not conclusive, several factors are reported as contributing to the economic performance of international strategic alliances, particularly international joint ventures. First, partner characteristics and partner compatibility and cooperation are influential factors. Luo 2007 suggests that partner traits along different dimensions (strategic vs. organizational) affect performance differently. In addition, Gong, et al. 2007 discusses contract completeness in conjunction with the expected partner opportunism. Second, inter-partner trust/social capital contributes to performance of international strategic alliances. Robson, et al. 2008 reports that distributive fairness and partner similarity help build trust between partners and trust in turn contributes to international strategic alliance performance; Yan and Gray 1994 argues that trust interacts with formal structural control in determining alliance performance. Third, culture differences at both country and organizational levels matter. Pothukuchi, et al. 2002 shows that national culture difference more significantly influences the efficiency and competitiveness aspect of alliance performance and that organizational culture difference is more influential on the satisfaction measures of performance. Fourth, perceived fairness can impact performance of international strategic alliances and the effects are not universal across all dimensions of fairness. Luo 2007 offers an in-depth theoretical explanation and empirical tests of procedural, distributive, and interactional justice on performance of international joint ventures. Fifth, while some research considers learning race to be detrimental to international strategic alliance stability, knowledge acquisition achieved as intended can contribute to performance. Tsang, et al. 2004 shows that effective parental control and commitments can contain or reverse the negative effect of learning race.

  • Gong, Yaping, Oded Shenkar, Yadong Luo, and Mee-Kau Nyaw. “Do Multiple Partners Help or Hinder International Joint Venture Performance? The Mediating Roles of Contract Completeness and Partner Cooperation.” Strategic Management Journal 28 (2007): 1021–1034.

    DOI: 10.1002/smj.626Save Citation »Export Citation »E-mail Citation »

    Analyses show that the number of partners is negatively related to international joint venture performance and that the relationship is mediated by contract completeness and partner cooperation.

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  • Luo, Yadong. “The Independent and Interactive Roles of Procedural, Distributive, and Interactional Justice in Strategic Alliances.” Academy of Management Journal 50.3 (2007): 644–664.

    DOI: 10.5465/AMJ.2007.25526452Save Citation »Export Citation »E-mail Citation »

    This study reports joint effects between procedural and distributive justice and between procedural and interactional justice on the performance of international joint ventures.

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  • Pothukuchi, Vijay, Fariborz Damanpour, Jaepil Choi, Chao C. Chen, and Seung Ho Park. “National and Organizational Culture Differences and International Joint Venture Performance.” Journal of International Business Studies 33.2 (2002): 243–265.

    DOI: 10.1057/palgrave.jibs.8491015Save Citation »Export Citation »E-mail Citation »

    This study argues and tests that, while national cultural differences matter, organizational culture differences contribute more to the negative effect on international joint venture performance. Different dimensions of national and organizational culture distances influence venture performance differently.

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  • Robson, Matthew J., Constantines S. Katsikeas, and Daniel C. Bello. “Drivers and Performance Outcomes of Trust in International Strategic Alliances: The Role of Organizational Complexity.” Organization Science 19.4 (2008): 647–665.

    DOI: 10.1287/orsc.1070.0329Save Citation »Export Citation »E-mail Citation »

    This study finds that both distributive fairness and partner similarity contribute to trust between partners and inter-partner trust contributes to alliance performance.

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  • Tsang, Eric W. K., Duc Tri Nguyen, and M. Krishna Erramilli. “Knowledge Acquisition and Performance of International Joint Ventures in the Transition Economy of Vietnam.” Journal of Marketing 12.2 (2004): 8–103.

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    The scholars develop and test a mediation model where parental conflict, commitments, and receptivity affect knowledge acquisition by international joint ventures, which in turn contributes to venture performance.

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  • Yan, Aimin, and Barbara Gray. “Bargaining Power, Management Control, and Performance in the United States-China Joint Ventures: A Comparative Case Study.” Academy of Management Journal 37.6 (1994): 1478–1517.

    DOI: 10.2307/256796Save Citation »Export Citation »E-mail Citation »

    This case study concludes that informal control mechanisms (mutual trust) interact with formal control structures (management and structural control) in influencing performance of international joint ventures.

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Stock Market Reaction

Several studies reported empirical evidence of market value creation effects of international strategic alliances and the focus has been on developed market firms listed on OECD stock exchanges. Chen, et al. 1991 reports a wealth creation effect of international strategic alliances for US firms. Frohls, et al. 1998 confirms the effect and suggests that the magnitude of wealth generation depends on partners’ home country economy; Ueng, et al. 2000 adds the moderating role of parent ownership control to the effect. Merchant 2002 shows that types of collaborative activities and industry competition also affect market valuation of international strategic alliances. Focusing on emerging market firms (rather than developed market firms), Miller, et al. 2008 finds that, while international strategic alliances create value for emerging market partners, the involvement of state ownership and nationality of foreign partner moderate the value creation effect of alliances.

  • Chen, Haiyang, Michael Y. Hu, and Joseph C. Shieh. “The Wealth Effect of International Joint Ventures: The Case of US investment in China.” Financial Management 20.4 (1991): 31–41.

    DOI: 10.2307/3665710Save Citation »Export Citation »E-mail Citation »

    Announcements of US-China joint ventures generate significant positive portfolio excess returns for investing US firms and positive wealth gains for shareholders. The positive effect though is negatively related to the size of foreign investment.

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  • Frohls, Michael A., Art Keown, Mark McNabb, and John Martin. “Growth Opportunities, Corporate Governance and the Market Value of Multinational Joint Ventures.” Managerial and Decision Economics 19 (1998): 13–29.

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    This study shows wealth generation effect by international joint ventures for US firms and the magnitude of wealth generated depends on the economic development level of partner’s home country.

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  • Merchant, Hemant. “Shareholder Value Creation via International Joint Ventures: Some Additional Explanations.” Management International Review 42.1 (2002): 49–69.

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    Results based on international joint venture announcements show that the types of activities, industry competition, and foreign parent control affect the abnormal returns from these announcements.

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  • Miller, Stewart R., Dan Li, Lorraine Eden, and Michael A. Hitt. “Insider Trading and the Valuation of International Strategic Alliances in Emerging Stock Markets.” Journal of International Business Studies 39.1 (2008): 102–117.

    DOI: 10.1057/palgrave.jibs.8400322Save Citation »Export Citation »E-mail Citation »

    This study focuses on market valuation for emerging market firms in international strategic alliances (rather than developed market firms) and finds that, while international strategic alliances create value for emerging market partners, the involvement of state ownership and nationality of foreign partner moderate the value creation effect of alliances.

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  • Ueng, C. Joe, Seung H. Kim, and C. Christopher Lee. “The Impact of Firm’s Ownership Advantages and Economic Status of Destination Country on the Wealth Effects of International Joint Ventures.” International Review of Financial Analysis 9.1 (2000): 67–76.

    DOI: 10.1016/S1057-5219(99)00017-4Save Citation »Export Citation »E-mail Citation »

    This research offers evidence on wealth creation of international joint ventures for US firms and the moderating role of parent ownership control and partner nationality.

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Evolution

Research on evolution of international strategic alliances is limited. Koza and Lewin 1998 suggests that strategic alliances evolve with firms’ strategy and external (institutional and competitive) environments. The existing studies in this area have tackled joint venture recovery from failure, post-entry ownership adjustment, and conversion from alliance to acquisition. Arino and Torre 1998 suggests that alliance relationship is dynamic and in constant adjustment for balance. Reuer and Miller 1997 and Puck, et al. 2009 study the conversation of international joint venture to cross-border acquisition and the factors influencing the transformation. Recent development in the literature offers more in-depth investigation of the evolving feature of international strategic alliances. Iriyama, et al. 2014 examines the frequency and directional reversal of equity ownership changes in international joint ventures and finds an imprinting effect on the likelihood of ownership change. Chung and Beamish 2010 and Chung and Beamish 2012 study frequency, magnitude, and path-dependency of structural changes after alliance formation and stress the complexity of alliance evolution and its great need for scholarly attention.

  • Arino, Africa, and Jose de la Torre. “Learning from Failure: Towards an Evolutionary Model of Collaborative Ventures.” Organization Science 9.3 (1998): 306–325.

    DOI: 10.1287/orsc.9.3.306Save Citation »Export Citation »E-mail Citation »

    Relationship quality is both an outcome and a mediating variable for the management of international joint ventures. Facing collaboration failure, partners’ assessment will cause them to take different actions (renegotiate/unilateral action) to restore balance. The process feeds back to the interaction between partners, affecting the evolution of international joint ventures.

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  • Chung, Chris C., and Paul W. Beamish. “The Trap of Continual Ownership Change in International Equity Joint Ventures.” Organization Science 21 (2010): 995–1015.

    DOI: 10.1287/orsc.1090.0489Save Citation »Export Citation »E-mail Citation »

    This research develops the concept of “trap of continual change” and suggests that responses to initial dissatisfaction with international joint venture performance can result in dysfunctional actions which push ventures to even further downward spiral. Shared ownership is emphasized as a counter-force to stabilize international joint ventures.

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  • Chung, Chris C., and Paul W. Beamish. “Multi-party International Joint Ventures: Multiple Post-formation Change Processes.” Journal of World Business 27 (2012): 648–663.

    DOI: 10.1016/j.jwb.2011.08.001Save Citation »Export Citation »E-mail Citation »

    This paper examines the complexity of post-formation structural change by jointly considering venture performance and magnitude and frequency of changes.

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  • Iriyama, Akie, Weilei Shi, and John E. Prescott. “Frequency and Directional Reversal of Equity Ownership Change in International Joint Ventures.” Asia Pacific Journal of Management 31 (2014): 215–243.

    DOI: 10.1007/s10490-013-9344-xSave Citation »Export Citation »E-mail Citation »

    This study adopts a social exchange perspective and investigates equity ownership change over the life-course of international joint venture. Using data on Japanese firms, the authors find an imprinting effect of initial partner equity imbalance and country cultural on ownership change.

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  • Koza, Mitchell P., and Arie Y. Lewin. “The Co-evolution of Strategic Alliances.” Organization Science 9 (1998): 255–264.

    DOI: 10.1287/orsc.9.3.255Save Citation »Export Citation »E-mail Citation »

    This conceptual paper develops a co-evolutionary theory of strategic alliance.

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  • Puck, Jonas F., Dirk Holtbrügge, Alexander T. Mohr, Seung-Hyun Lee, and Mona Makhija. “Beyond Entry Mode Choice: Explaining The Conversion of Joint Ventures into Wholly Owned Subsidiaries in the People’s Republic of China.” Journal of International Business Studies 40 (2009): 388–404.

    DOI: 10.1057/jibs.2008.56Save Citation »Export Citation »E-mail Citation »

    This study finds that generation of local knowledge and reduction of external uncertainty promotes the conversion of international joint venture to acquisition while cultural distance and governmental regulations deter the conversion.

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  • Reuer, Jeffrey J., and Kent D. Miller. “Agency Costs and the Performance Implications of International Joint Venture Internalization.” Strategic Management Journal 18.6 (1997): 425–438.

    DOI: 10.1002/(SICI)1097-0266(199706)18:6<425::AID-SMJ878>3.0.CO;2-#Save Citation »Export Citation »E-mail Citation »

    This study examines stock market reaction to international joint venture internalization (i.e., one partner acquires the international joint venture by buying out its other partner[s]).

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