An Examination of the Core Dimensions
New Horizons in International Business series
Chapter 1: Introduction: What do we Know About International Joint Ventures?
INTRODUCTION The proliferation of inter-firm collaboration has been well documented (e.g. Hergert and Morris, 1988; Hagedoorn, 1996; Gomes-Casseres, 1996; Beamish and Delios, 1997a; Glaister and Buckley, 1994; Glaister et al. 1998), with alliance activity now a crucial part of the strategy of many firms (Harrigan, 1985, 1988a; Bleeke and Ernst 1993a,b). Competitive advantage increasingly depends not only on a company’s internal capabilities but also on the types of alliances and the scope of its relationships with other companies (Parkhe, 1991). These trends signal the need to understand the nature of inter-firm collaborative activity, not least because it has a profound effect on the practising managers (Buckley and Young, 1993: 215). The focus of this book is a subset of strategic alliance activity – that of international equity joint ventures (JVs). These involve two or more legally distinct organizations (the parents), each of which invests in the venture (the child) and actively participates in the decision-making activities of the jointly owned entity. A JV is considered to be international if at least one partner has its headquarters outside the venture’s country of operation or if the JV has a significant level of operation in more than one country. International joint ventures (IJVs) have been described as ‘a logical and timely response to intense and rapid changes in economic activity, technology, and globalisation’ (Doz and Hamel, 1998: xiv). Doz and Hamel argue that globalization has opened the ‘race for the world’ as firms enter once-closed markets and pursue untapped opportunities. At the...