Business Strategy and Public Policy
Edited by Yannis Caloghirou, Nicholas S. Vonortas and Stavros Ioannides
6. Determinants of RJV formation – RJV returns Yannis Caloghirou and Nicholas S. Vonortas As mentioned in Chapter 1, a key methodological component of the research project underlying the results reported in this book was extensive empirical analysis utilizing the various forms of data created speciﬁcally for this purpose (STEP-TO-RJVs Databank). This step included statistical analysis of RJVs and RJV participants’ characteristics, objectives and strategies, and econometric analysis of the determinants and impacts of RJVs.1 This chapter summarizes the results of econometric work on three important issues: ● ● ● The determinants of RJV formation; RJV performance; The impact of RJVs on industries and on regional economies. DETERMINANTS OF RJV FORMATION The econometric analysis of the incentives to form an RJV developed at two levels: 1. 2. The ﬁrst level addressed the question of why ﬁrms enter into an RJV. The second level addressed the interaction between partners: why two or more ﬁrms decide to enter an RJV together. The paper by Hernan, Marin, and Siotis (1999) addressed the ﬁrst question. Their review of the theoretical economics literature showed that the mechanisms underlying RJV participation are complex. More speciﬁcally, strategic interactions in the product market aﬀect the decision to participate in RJVs both directly and indirectly (for example, when RJVs are simply used as a vehicle to enhance the feasibility of product market collusion). Second, RJVs involve internalization of technological spillovers, 121 122 Theory and practice R&D cost sharing and the gathering of information that may be of strategic importance....
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