An Examination of the Core Dimensions
New Horizons in International Business series
INTRODUCTION This chapter provides an empirical examination of the motives for IJV formation and performance outcomes. The following section briefly reviews the literature relating to motives for IJV formation and issues associated with IJV performance, and identifies a set of research questions. The findings are presented in the third section and discussion in the fourth section. Conclusions are in the final section. MOTIVES AND PERFORMANCE IN IJVs The Strategic Motives for IJV Formation An explanation for the use of IJVs stems from theories on how strategic behaviour influences the competitive positioning of the firm (Kogut, 1988: 321). The literature clearly indicates a number of overlapping perspectives on the strategic motives for IJV formation, with the various authors arriving at a broadly similar set of motivating forces, for example, Mariti and Smiley (1983), Harrigan (1985), Porter and Fuller (1986), Contractor and Lorange (1988). Young et al. (1989: 19) have noted that it is necessary to distinguish between the role of IJVs in establishing corporate linkages, such as sharing investment risks, attainment of economies of scale, exchange of complementary technology, and so on, as opposed to their role in corporate entry strategies, principally entry to new geographical markets. This suggests greater difficulties and possibly greater risks involved in market entry IJVs and highlights the importance attributed to a close knowledge of national cultural factors when a new market is being envisaged. An important purpose for IJV formation is to facilitate market entry (Hill et al., 1990; Glaister and Buckley, 1996). This may...
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