International Joint Venture Instability: Reconceptualisation and New Evidence

International joint ventures (IJVs) are a popular entry mode for multinational enterprises (MNEs) and are believed to be beneficial to investing firms, local parents and other economic agents in the host country economy. It is, however, also recognised that IJVs suffer from high levels of instability. The past decades have seen the topic of IJV instability being studied extensively from different theoretical perspectives with mixed empirical findings. Two major limitations of previous research were the adoption of only the parents’ perspective and not considering the perspective of international joint venture firms (IJVFs). This research seeks to re-conceptualise IJV instability by adopting an IJVF perspective.

This research builds a conceptual framework that highlights the factors influencing IJV instability on the basis of Transaction Cost Approach (TCA) and Knowledge-Based View (KBV), by adopting an IJVF’s point of view. Three studies are included in this thesis. The first investigates how opportunism, autonomy and tacit knowledge influence IJV instability. The second looks at the relationship between stability and instability. To what extent are they completely opposite concepts? The final project focuses on the understanding of parental opportunism.

The results of the first study find that parental opportunism plays a critical role in influencing an IJV’s instability. The interaction of tacit knowledge and autonomy moderates the effect of parental opportunism on IJV instability. The empirical findings of the second study demonstrate that the factors which influence an IJV’s instability do not always have an inverse impact on its stability. The findings of the third study reveal that tacit knowledge will cause parental opportunism only when an IJVF’s autonomy is at a lower level. This thesis makes the following contribution. It develops three conceptual models from knowledge-based and transaction cost theoretical perspectives, agency theory and resource dependence theory, with IJV instability and stability and parental opportunistic behaviour as dependent variables.