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EXECUTIVE SUMMARY
This paper will review the literature in the field of international joint ventures (IJVs) and attempt to integrate the literature in one framework. Previous studies have focused on a limited number of issues in IJVs. This study will focus on the most important issues in the formation and performance of IJVs, namely, motives for venture formation, partner selection criteria, trust and commitment, knowledge, learning, bargaining power, and control. After a review of the literature, the author will present an integrated framework, followed by future research directions in the field of IJVs.
Keywords: Joint Ventures, Motives for Formation, Trust, Commitment, Partner Selection
INTRODUCTION
The last decade has witnessed an increasing globalization of the business environment, caused partly by the rapid integration of the economies of industrialized nations, and the globalization of products, markets, consumer tastes, and lifestyles. Organizations in developed countries have realized that they need to pursue opportunities aggressively in other countries in order to remain competitive in this fast-paced global market. As international business activities continue to grow, organizations around the world are establishing partnerships with firms from other nations. Researchers and practitioners have suggested that the development of such partnerships is a key to success in the global marketplace. Despite the high rate of failures for joint ventures, firms choose to enter into such alliances to gain access to world markets. In fact Medina (1996), in her dissertation, found that job satisfaction ranked higher in joint venture managers than in wholly owned subsidiaries managers.
Partnerships among firms can take various forms. Commonly known as strategic alliances, they can range from licensing agreements to fully blown joint ventures. One way of approaching strategic alliances is through Williamson's (1975) transaction cost approach. This approach states that strategic alliance options lie on a continuum. On one end of the continuum is the free market (informal cooperative ventures) method and on the other hand is the hierarchy (mergers and acquisitions) method of conducting business. Joint ventures are in the middle of this continuum. However, this study will only examine the issues relating to international joint venture (IJV) formation and partner selection. The terms joint venture (JV) and international joint venture (UV) are used interchangeably. Since the focus of this study is IJVs, both terms...