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Country risk, national cultural differences between partners and survival of international joint ventures in Brazil

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  • Meschi, Pierre-Xavier
  • Riccio, Edson Luiz
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    Abstract

    This article aims to identify the main and interaction effects of two country-level variables, namely national distance and country risk, on the survival of international joint ventures in emerging markets. Research hypotheses predicting the negative impact of national distance and country risk on survival of international joint ventures are formulated in this article. These research hypotheses are examined in a sample of 234 international joint ventures formed in Brazil between 1973 and 2004. These international joint ventures were subjected to an event history analysis over a period of time ranging from 1973 to 2006. The empirical results show that large national cultural differences between local and foreign partners increase the instability of international joint ventures, whereas the survival of these alliances does not seem to be affected either by the economic and political uncertainty of Brazil. Furthermore, the national distance between local and foreign partners has effects on survival that are variable according to the life cycle of international joint ventures.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 17 (2008)
    Issue (Month): 3 (June)
    Pages: 250-266

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    Handle: RePEc:eee:iburev:v:17:y:2008:i:3:p:250-266

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    Keywords: Country risk and national distance Emerging market and Brazil Event history analysis International joint venture Survival;

    References

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    1. Chol Lee & Paul W Beamish, 1995. "The Characteristics and Performance of Korean Joint Ventures in LDCS," Journal of International Business Studies, Palgrave Macmillan, vol. 26(3), pages 637-654, September.
    2. J Michael Geringer & Louis Hebert, 1991. "Measuring Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 22(2), pages 249-263, June.
    3. Harry G Barkema & Freek Vermeulen, 1997. "What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures?," Journal of International Business Studies, Palgrave Macmillan, vol. 28(4), pages 845-864, December.
    4. Aimin Yan, 1998. "Structural Stability and Reconfiguration of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 29(4), pages 773-795, December.
    5. Yigang Pan, 1996. "Influences on Foreign Equity Ownership Level in Joint Ventures in China," Journal of International Business Studies, Palgrave Macmillan, vol. 27(1), pages 1-26, March.
    6. Jiatao Li & Stephen Guisinger, 1991. "Comparative Business Failures of Foreign-Controlled Firms in the United States," Journal of International Business Studies, Palgrave Macmillan, vol. 22(2), pages 209-224, June.
    7. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
    8. Seung Ho Park & Michael V. Russo, 1996. "When Competition Eclipses Cooperation: An Event History Analysis of Joint Venture Failure," Management Science, INFORMS, vol. 42(6), pages 875-890, June.
    9. Tsang, Eric W.K., 2005. "Influences on foreign ownership level and entry mode choice in Vietnam," International Business Review, Elsevier, vol. 14(4), pages 441-463, August.
    10. Vijay Pothukuchi & Fariborz Damanpour & Jaepil Choi & Chao C Chen & Seung Ho Park, 2002. "National and Organizational Culture Differences and International Joint Venture Performance," Journal of International Business Studies, Palgrave Macmillan, vol. 33(2), pages 243-265, June.
    11. Jean-Fran�ois Hennart & Ming Zeng, 2002. "Cross-Cultural Differences and Joint Venture Longevity," Journal of International Business Studies, Palgrave Macmillan, vol. 33(4), pages 699-716, December.
    12. Nakamura, Masao, 2005. "Joint venture instability, learning and the relative bargaining power of the parent firms," International Business Review, Elsevier, vol. 14(4), pages 465-493, August.
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    Cited by:
    1. Yannis A. HAJIDIMITRIOU & Nikolaos S. SKLAVOUNOS & Konstantinos P. ROTSIOS, 2012. "The Impact Of Trust On Knowledge Transfer In International Business Systems," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 39-49.
    2. López-Duarte, Cristina & Vidal-Suárez, Marta M., 2010. "External uncertainty and entry mode choice: Cultural distance, political risk and language diversity," International Business Review, Elsevier, vol. 19(6), pages 575-588, December.
    3. López-Duarte, Cristina & Vidal-Suárez, Marta M., 2013. "Cultural distance and the choice between wholly owned subsidiaries and joint ventures," Journal of Business Research, Elsevier, vol. 66(11), pages 2252-2261.
    4. De Clercq, Dirk & Danis, Wade M. & Dakhli, Mourad, 2010. "The moderating effect of institutional context on the relationship between associational activity and new business activity in emerging economies," International Business Review, Elsevier, vol. 19(1), pages 85-101, February.
    5. Moeller, Miriam & Harvey, Michael & Griffith, David & Richey, Glenn, 2013. "The impact of country-of-origin on the acceptance of foreign subsidiaries in host countries: An examination of the ‘liability-of-foreignness’," International Business Review, Elsevier, vol. 22(1), pages 89-99.
    6. Meschi, Pierre-Xavier & Wassmer, Ulrich, 2013. "The effect of foreign partner network embeddedness on international joint venture failure: Evidence from European firms’ investments in emerging economies," International Business Review, Elsevier, vol. 22(4), pages 713-724.
    7. Yamin, Mo & Golesorkhi, Sougand, 2010. "Cultural distance and the pattern of equity ownership structure in international joint ventures," International Business Review, Elsevier, vol. 19(5), pages 457-467, October.
    8. Malik, Tariq H. & Zhao, Yanzhi, 2013. "Cultural distance and its implication for the duration of the international alliance in a high technology sector," International Business Review, Elsevier, vol. 22(4), pages 699-712.
    9. Pak, Yong Suhk & Ra, Wonchan & Park, Young-Ryeol, 2009. "Understanding IJV performance in a learning and conflict mediated context," International Business Review, Elsevier, vol. 18(5), pages 470-480, October.
    10. Abdellatif, Mahamat & Amann, Bruno & Jaussaud, Jacques, 2010. "Family versus nonfamily business: A comparison of international strategies," Journal of Family Business Strategy, Elsevier, vol. 1(2), pages 108-116, June.

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