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Investment and control in international joint ventures: the case of China

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  • Child, John
  • Yan, Yanni
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    Abstract

    In this study, we explore several factors affecting the amount of control that foreign companies have over their joint ventures in China. Managers working in sixty-seven international joint ventures were asked to report the share of equity held by the Chinese and foreign partners; the extent to which each partner had contributed important non-capital resources; the ratio of IJV board members appointed by each partner; the nationality of managers holding key executive positions in the IJVs; and the amount of strategic and operational control that each partner enjoyed. Results showed that equity share is the major lever for the exercise of strategic control and also influences operational control through its effects on the appointment of board members and appointments to key executive positions. Results also showed that providing non-capital resources has a direct effect on operational control in addition to its indirect effect through appointments to key executive positions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of World Business.

    Volume (Year): 34 (1999)
    Issue (Month): 1 (April)
    Pages: 3-15

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    Handle: RePEc:eee:worbus:v:34:y:1999:i:1:p:3-15

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    References

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    1. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
    2. Donald J Lecraw, 1984. "Bargaining Power, Ownership, and Profitability of Transnational Corporations in Developing Countries," Journal of International Business Studies, Palgrave Macmillan, vol. 15(1), pages 27-43, March.
    3. J Michael Geringer, 1991. "Strategic Determinants of Partner Selection Criteria in International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 22(1), pages 41-62, March.
    4. 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.
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    Cited by:
    1. Bhattacharyya, Asish K, 2005. "State, liberalization, and investment question: issues in corporate governance," MPRA Paper 47233, University Library of Munich, Germany, revised 2007.
    2. Sonya Wen & Cheng-Min Chuang, 2010. "To teach or to compete? A strategic dilemma of knowledge owners in international alliances," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 697-726, December.
    3. Chalos, Peter & O'Connor, Neale G., 2004. "Determinants of the use of various control mechanisms in US-Chinese joint ventures," Accounting, Organizations and Society, Elsevier, vol. 29(7), pages 591-608, October.
    4. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    5. Karhunen, Päivi & Löfgren, Joan & Kosonen, Riitta, 2008. "Revisiting the relationship between ownership and control in international business operations: Lessons from transition economies," Journal of International Management, Elsevier, vol. 14(1), pages 78-88, March.
    6. Dominique Jolly, 2005. "The Exogamic Nature of Sino-Foreign Joint Ventures," Asia Pacific Journal of Management, Springer, vol. 22(3), pages 285-306, September.
    7. Jaussaud, Jacques & Schaaper, Johannes, 2006. "Control mechanisms of their subsidiaries by multinational firms: A multidimensional perspective," Journal of International Management, Elsevier, vol. 12(1), pages 23-45, March.

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