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1 – 10 of over 7000To date, there has been little research about the degree of correspondence between partner equity ownership and partner representation on boards of joint ventures (JVs). It is…
Abstract
Purpose
To date, there has been little research about the degree of correspondence between partner equity ownership and partner representation on boards of joint ventures (JVs). It is generally assumed that partners’ share equals board representation in percentage. This paper aims to explore various instances of deviation from the above norm.
Design/methodology/approach
Using a unique database of 259 JV contracts extracted from the US Securities and Exchange Commission, and by drawing from resource dependency and transaction cost theories, this manuscript explores the factors that increase or decrease the deviation between equity share and board representation.
Findings
The results show that international JVs (IJVs) tend to deviate more, while JVs with a deadlock clause, a large board and based in a stable country deviate less from the degree of correspondence between equity share and board representation.
Originality/value
This study contributes to the alliance and governance literatures by identifying factors that influence the degree of correspondence between partner investment (equity share) and control through board of director representation.
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This paper delves into the mechanism of the contingency framework for foreign entry mode decisions and identifies two essential tasks that jointly determine the outcome of the…
Abstract
This paper delves into the mechanism of the contingency framework for foreign entry mode decisions and identifies two essential tasks that jointly determine the outcome of the entry mode decision. It then recognizes a critical weakness in previous research pertaining to the comparison of entry modes along a key decision criterion, the degree of control. Existing studies generally treat equity involvement as the only source of entrant control, while largely ignoring non‐equity sources of control (i.e., bargaining power and trust). Non‐equity sources of control, when underutilized, amount to missed opportunities, increased resource commitments, and heightened risk exposures in foreign markets. Drawing from a pluralism perspective in transaction and relationship governance, the author presents a more integrative method for the ranking of entry modes along the degree of control. The central message is that companies entering foreign markets should make an earnest effort to identify trust and bargaining power situations and fully utilize their control potential in making entry mode decisions.
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Ilya R.P. Cuypers and Xavier Martin
We provide a comprehensive synthesis and extension of the real option (RO) literature on joint ventures (JVs), contributing in three main areas. First, we examine major…
Abstract
We provide a comprehensive synthesis and extension of the real option (RO) literature on joint ventures (JVs), contributing in three main areas. First, we examine major alternative theoretical perspectives on JVs – learning, bargaining, transaction cost and agency theory – to elaborate how they complement or contradict RO predictions. Second, we compare arguments and variables used to explain different JV stages – initial RO explicitness and equity shares, JV stability, and performance consequences – and highlight research opportunities. Third, we discuss and extend research about behavioral aspects of making RO (JV) investments. Overall, we offer new predictions and suggestions for a better integration within the RO literature, and between RO and related literatures on JVs.
Huaning Li and Colin M. Clarke‐Hill
This paper analyses the investment patterns of Sino‐British joint ventures in China. The research is based on the data of 551 Sino‐British joint ventures formed over the period of…
Abstract
This paper analyses the investment patterns of Sino‐British joint ventures in China. The research is based on the data of 551 Sino‐British joint ventures formed over the period of 1983 to 1996. It aims to provide an overview of Sino‐British joint ventures' investment in China and to explain the investment conditions. The article analyses the investment patterns from the dimensions of investment value, geographical location, industry sector and equity ownership. To explain the formation of the patterns, it further explores the host country factors of investment based on the policy framework, economic determinants and business facilitation. It reveals the investment trend, the uneven spatial distribution, the sectoral characteristics and the ownership structure of joint ventures. Suggests that government economic strategy and policies towards FDI are imperative in shaping the investment patterns. Locational advantages, economic growth, industrial structures and reform process are major economic factors influencing the investment decisions. Decentralisation of decision making and local governments' facilitation efforts also play a complementary role in attracting foreign investment.
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Robert F. Bruner, Robert E. Spekman, Petra Christmann, Brian Kannry and Melinda Davies
This case may be taught singly or used as a merger-negotiation exercise with “Daimler-Benz A. G.: Negotiations between Daimler and Chrysler” (UVA-F-1241). Set in February 1998…
Abstract
This case may be taught singly or used as a merger-negotiation exercise with “Daimler-Benz A. G.: Negotiations between Daimler and Chrysler” (UVA-F-1241). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.
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Yu‐Ching Chiao, Fang‐Yi Lo and Chow‐Ming Yu
The purpose of this paper is to examine the impact that three sets of variables – derived from transaction cost theory (TCT), the resource‐based view (RBV), and institutional…
Abstract
Purpose
The purpose of this paper is to examine the impact that three sets of variables – derived from transaction cost theory (TCT), the resource‐based view (RBV), and institutional environment – have on choice of entry strategies of multinational corporations (MNCs) from an emerging market.
Design/methodology/approach
The sample consisted of 819 Taiwanese firms which were investigated using a national survey, and logistic regression analysis was used for testing the hypotheses.
Findings
The empirical findings confirm that the following factors affect this decision: firm‐specific assets, international experience, whether a firm is investing abroad in pursuit of a particular customer, whether a firm seeks complementary assets abroad, and the perceived institutional differences (PEDs) between a firm's home country and the host country. The findings also suggest that PEDs have a moderating effect on foreign market entry.
Research limitations/implications
As MNCs from emerging markets make the decision of entry mode strategies, they must carefully consider not only the related variables in terms of TCT and the RBV, but also the influence of institutional factors in host countries.
Originality/value
This paper explores the modes of entry chosen by Taiwanese firms investing in China on the basis of TCT, institutional environment, and the RBV.
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Kimberly C. Gleason, Jeff Madura and Joan Wiggenhorn
To determine what characteristics distinguish firms that conduct international business within three years of going public and six years from founding, and how these firms perform.
Abstract
Purpose
To determine what characteristics distinguish firms that conduct international business within three years of going public and six years from founding, and how these firms perform.
Design/methodology/approach
A logistic regression analysis is used to identify characteristics that distinguish firms that are international at the time they go public, versus those that are not. The paper also assesses post‐IPO performance and apply multivariate analysis to determine how performance varies among these firms.
Findings
Compared to firms of similar age who do not pursue rapid internationalization, born‐global firms are generally larger, more diversified, and have more venture capital backing. Their founders, board members and managers exhibit more international experience. The returns 12 and 18 months post‐IPO are significantly higher for born‐global firms than for a control sample of firms who do not engage in rapid internationalization. Furthermore, those born‐global firms with joint ventures or acquisitions in several countries perform better than those that only export within the first six years since their inception.
Research limitations/implications
Managerial implications include having a board of directors with sound international business experience as well as using a venture capital firm to provide monitoring and oversight of operations at home and in the foreign market.
Originality/value
This paper is original in that it is the first to provide a financial markets‐oriented empirical investigation of the “born‐global” phenomenon using a sample of newly public American firms.
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The production and sale of counterfeit products is big business in the international economy. Nowhere is this more evident than in China. This paper aims to review the…
Abstract
Purpose
The production and sale of counterfeit products is big business in the international economy. Nowhere is this more evident than in China. This paper aims to review the anti-counterfeiting strategies that have been identified in the literature on counterfeiting.
Design/methodology/approach
The paper takes the form of a literature review.
Findings
This paper reviews 11 anti-counterfeiting strategies that have been suggested by relevant literature and has identified some of the success conditions. It also finds that firms should seek to take a longer-term view and to protect their technology-based competitive advantage. This is already happening: Japanese blue chip companies have begun to relocate sensitive R&D and high-tech manufacturing away from risky locations and back to Japan.
Research limitations/implications
The paper shows that the dominant legal enforcement (perspective) approach has been of limited success and explains the reasons for its failure.
Practical implications
The paper concludes that anti-counterfeiting strategies should be seen as complementary rather than as mutually exclusive and that in the long run, as countries get more technologically advanced, governments will develop a strong self-interest in tackling the counterfeit problem themselves.
Originality/value
The paper provides a systematic discussion of alternative anti-counterfeiting strategies that have been suggested by the literature and explores their success conditions in some detail.
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The purpose of this paper is to describe how seven sourcing models operate along a continuum depending on the complexity of the marketplace and the strategic needs of buyers and…
Abstract
Purpose
The purpose of this paper is to describe how seven sourcing models operate along a continuum depending on the complexity of the marketplace and the strategic needs of buyers and suppliers. Studies of business procurement and sourcing practices reveal that collaborative and holistic approaches will increase efficiencies and value in strategic outsourcing relationships.
Design/methodology/approach
The design is based on research and fieldwork from the University of Tennessee and vetted with the Sourcing Industry Group, the Center for Outsourcing Research and Education and the International Association for Contracts and Commercial Management. This work provided the basis and framework for the 2015 book, Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models in Modern Procurement.
Findings
Most organizations operate under conventional transaction-based models that are constrained by a formal, legally oriented, risk-averse and liability-based culture. There is growing awareness that transactional-based approaches do not always give each party the intended, or best, results. University of Tennessee research shows how organizations apply alternative output- and outcome-based approaches for complex contracts. That experience demonstrates that alternative Sourcing Business Models are viable approaches to the conventional transactional methods[1]. As senior leaders see positive results from carefully crafted collaborative agreements, momentum grows for both output- and outcome-based approaches.
Practical implications
Education on sourcing business models.
Originality/value
Collaborative outsourcing.
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The management and strategy literature continues to show that many companies now rely on alliances for their long‐term success. This paper seeks to explain why some industries…
Abstract
Purpose
The management and strategy literature continues to show that many companies now rely on alliances for their long‐term success. This paper seeks to explain why some industries have an over‐representation of inter‐firm strategic alliances, relative to others.
Design/methodology/approach
A theory of group behavior is used to show that an inter‐organizational phenomenon, notably the interaction of convergent expectations, including shared patterns of behavior, beliefs and mindsets, are partially responsible for the disproportionate use of alliances in some industries relative to others. The theory of group behavior presented draws mainly on conceptual ideas from regime and new institutional theory.
Findings
The framework suggests that the presence of industry‐embedded factors, including shared mindsets, creates the conditions that transform the strategic interests and behavior of individual firms into a macro phenomenon that diffuses across an industry. Industry developed shared mindsets in turn provide the conditions for trust to endure, cooperation instead of opportunism to prevail, and lower transaction costs, all critical elements for alliance formation.
Practical implications
The research presented here shows that industry‐level factors may be an important factor for determining the incidence and perhaps the performance of value‐creating alliances.
Originality/value
This paper extends our understanding of strategic alliances as a source of a firm's competitiveness and fulfills a need for a greater understanding of the over‐representation of strategic alliances in some industries, relative to others.
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