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Legitimacy in international joint ventures: It is still needed

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  • Alcantara, Lailani
  • Mitsuhashi, Hitoshi
  • Hoshino, Yasuo
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    Abstract

    International joint ventures (IJVs) enable foreign firms to complement their lack of local knowledge and resources by accessing their local partners' knowledge and resource bases. However, IJV formation is not simply a means of overcoming legitimacy-related challenges that stem primarily from a local market's unfamiliarity with foreign firms. This paper proposes that foreign firms can increase the legitimacy of their IJVs to facilitate local market penetration by building interorganizational linkages through which third parties and, especially, prospective customers in local markets can infer the viability and competence of IJVs. Our empirical analyses of manufacturing IJVs in Japan support our arguments.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 12 (2006)
    Issue (Month): 4 (December)
    Pages: 389-407

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    Handle: RePEc:eee:intman:v:12:y:2006:i:4:p:389-407

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    Related research

    Keywords: International joint ventures Legitimacy Interorganizational linkages Signals;

    References

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    1. Luo, Yadong & Shenkar, Oded & Nyaw, Mee-Kau, 2002. "Mitigating liabilities of foreignness: Defensive versus offensive approaches," Journal of International Management, Elsevier, vol. 8(3), pages 283-300.
    2. Randolph P. Beatty & Jay R. Ritter, . "Investment Banking, Reputation and the Underpricing of Initial Public Offerings," Rodney L. White Center for Financial Research Working Papers 02-85, Wharton School Rodney L. White Center for Financial Research.
    3. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan, vol. 27(5), pages 905-927, December.
    4. Chang, Sea Jin, 2004. "Venture capital financing, strategic alliances, and the initial public offerings of Internet startups," Journal of Business Venturing, Elsevier, vol. 19(5), pages 721-741, September.
    5. Mezias, John M., 2002. "How to identify liabilities of foreignness and assess their effects on multinational corporations," Journal of International Management, Elsevier, vol. 8(3), pages 265-282.
    6. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan, vol. 27(4), pages 905-927, December.
    7. Shige Makino & Paul W Beamish, 1998. "Performance and Survival of Joint Ventures with Non-Conventional Ownership Structures," Journal of International Business Studies, Palgrave Macmillan, vol. 29(4), pages 797-818, December.
    8. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 20(2), pages 235-254, June.
    9. 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.
    10. Lummer, Scott L. & McConnell, John J., 1989. "Further evidence on the bank lending process and the capital-market response to bank loan agreements," Journal of Financial Economics, Elsevier, vol. 25(1), pages 99-122, November.
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    Cited by:
    1. Alcantara, Lailani Laynesa & Mitsuhashi, Hitoshi, 2012. "Make-or-Break Decisions in Choosing Foreign Direct Investment Locations," Journal of International Management, Elsevier, vol. 18(4), pages 335-351.

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