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Adoption of new technology and joint venture instability

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  • Kabiraj, Tarun
  • Roy Chowdhury, Prabal

Abstract

We consider a joint venture between a local firm from a less developed country, and a foreign multinational. In a dynamic two period model, we demonstrate that the availability of new technology can trigger a joint venture breakdown, a result that is consistent with the empirical evidence. We find that such breakdown is more likely if the MNC is relatively patient, or, in contrast to the existing literature, there is an increase in the level of demand. Moreover, our results are robust to alternative assumptions regarding bargaining power and control.

Suggested Citation

  • Kabiraj, Tarun & Roy Chowdhury, Prabal, 2008. "Adoption of new technology and joint venture instability," Research in International Business and Finance, Elsevier, vol. 22(2), pages 108-123, June.
    • Handle: RePEc:eee:riibaf:v:22:y:2008:i:2:p:108-123
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    References listed on IDEAS

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    1. Tarun Kabiraj & Ching Chyi Lee & Sugata Marjit, 2005. "Cultural Compatibility and Joint Venture Instability: A Theoretical Analysis," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 40(2), pages 209-220, December.
    2. Roy Chowdhury, Prabal & Roy Chowdhury, Indrani, 2001. "Joint venture instability: a life cycle approach," MPRA Paper 1556, University Library of Munich, Germany, revised Jan 2007.
    3. Marjit, Sugata & Chowdhury, Prabal Roy, 2004. "Asymmetric capacity costs and joint venture buy-outs," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 425-438, July.
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    11. Roy Chowdhury, Indrani & Roy Chowdhury, Prabal, 2001. "A theory of joint venture life-cycles," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 319-343, March.
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    Cited by:

    1. Kabiraj, Tarun & Sengupta, Sarbajit, 2018. "A theory of joint venture instability under inter-partner learning," Research in International Business and Finance, Elsevier, vol. 46(C), pages 363-372.
    2. Rituparna Kaushik & Sourabh Bikas Paul, 2021. "Strategic Interactions, Bargaining Power and Stability of Joint Venture in an Emerging Nation," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 543-564, December.
    3. Banerjee, Shantanu & Mukherjee, Arijit, 2010. "Joint venture instability in developing countries under entry," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 603-614, October.
    4. Zhang-sheng Jiang & Yun-hong Hao, 2013. "Game analysis of technology innovation alliance stability based on knowledge transfer," Computational and Mathematical Organization Theory, Springer, vol. 19(4), pages 403-421, December.

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