Match-Making in international joint ventures in emerging economies: Aligning asymmetric financial strength and equity stake
, Anne NORHEIM-HANSEN
, Edson RICCIO
2017, Management International Review, 57(3), pp.411-440
International joint ventures
Event history method
Social exchange
theory
Partner asymmetry
Brazil
Abstract
This paper attends to prior equivocal results concerning partner asymmetry and international joint venture (IJV) performance. More specifically, we examine how asymmetric financial strength between the partners influences IJV termination in emerging economies, and consider the asymmetry direction as well as the local partner’s equity stake as contingency factors. Our event history analysis of 119 IJVs formed in Brazil shows that asymmetric financial strength increases the likelihood of termination. However, notably, the findings reveal that higher local partner financial strength is less harmful to IJV performance than lower local partner financial strength. Moreover, under both conditions, IJV performance is better when the highest equity stake is attributed to the local partner.