Partner Selection Criteria as Determinants of Firm Performance in Joint Ventures: Evidence from Greek Joint Ventures in Eastern Europe

The present paper reviews Greek entrepreneurial activity, mainly foreign direct investment, in the Black Sea Economic Cooperation Area from 1989 to 2004. It assesses the association between the performance of joint ventures and partner selection criteria, drawn from theoretical considerations of international joint ventures. This is achieved using an econometric treatment of survey data from Greek enterprises involved in joint ventures with Eastern European companies. We develop ordered probit models of the determinants of three measures of firm performance: financial performance, general managers' performance, and personnel performance. The findings confirm that Greek joint ventures' performance in Eastern Europe is explained by the same set of factors that have been found to explain such activity elsewhere. The statistically significant factors are adequate financial resources, no opportunistic motives, partner being involved in similar activities, partner being imposed by the external environment, and partner status. However, the only determinant common to all three measures is the partner being involved in similar activities. Overall, and taking into consideration previous research, this suggests that Greek firms' future prospects seem secure, due to a competitive advantage from their early entry into East European markets and the careful selection of their partners.