Contracting Institutions and Ownership Structure in International Joint Ventures
AbstractThis paper examines the role of contracting institutions on a multinational firm's optimal ownership strategy. We develop a model in which both a multinational firm and its local joint venture partner can ex post engage in costly rent-seeking actions to increase their ex ante agreed upon revenue share. We show that the host country's level of contract enforcement and level of judicial favoritism affect the parties' incentives to contribute to the international joint venture. The model allows us to identify testable hypotheses relating these institutional features with the performance and optimal ownership structure of international joint ventures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CIRANO in its series CIRANO Working Papers with number 2013s-04.
Date of creation: 01 Feb 2013
Date of revision:
Contact details of provider:
Postal: 2020 rue University, 25e étage, Montréal, Quéc, H3A 2A5
Phone: (514) 985-4000
Fax: (514) 985-4039
Web page: http://www.cirano.qc.ca/
More information through EDIRC
international joint venture; ownership structure; institutions; contract enforcement; judicial favoritism;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-02 (All new papers)
- NEP-BEC-2013-03-02 (Business Economics)
- NEP-CTA-2013-03-02 (Contract Theory & Applications)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dasgupta, Sudipto & Tao, Zhigang, 1998. "Contractual incompleteness and the optimality of equity joint ventures," Journal of Economic Behavior & Organization, Elsevier, vol. 37(4), pages 391-413, December.
- Mui, V.L., 1995.
"Contracting in the Shadows of a Corrupt Court,"
9507, Southern California - Department of Economics.
- Vai-Lam Mui, 1999. "Contracting in the Shadow of a Corrupt Court," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(2), pages 249-, June.
- Daron Acemoglu & Simon Johnson, 2003.
NBER Working Papers
9934, National Bureau of Economic Research, Inc.
- Alvaro Cuervo-Cazurra & Mary M Maloney & Shalini Manrakhan, 2007. "Causes of the difficulties in internationalization," Journal of International Business Studies, Palgrave Macmillan, vol. 38(5), pages 709-725, September.
- Nicola Gennaioli & Enrico Perotti, 2012.
"Standardized Enforcement: Access to Justice vs. Contractual Innovation,"
652, Barcelona Graduate School of Economics.
- Gennaioli, Nicola & Perotti, Enrico C, 2011. "Standardized Enforcement: Access to Justice vs Contractual Innovation," CEPR Discussion Papers 8478, C.E.P.R. Discussion Papers.
- Nicola Gennaioli & Enrico Perotti, 2009. "Standardized enforcement: Access to justice vs contractual innovation," Economics Working Papers 1329, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2012.
- Moenius, Johannes & Berkowitz, Daniel, 2011. "Law, trade, and development," Journal of Development Economics, Elsevier, vol. 96(2), pages 451-460, November.
- Avinash Dixit, 2011. "International Trade, Foreign Direct Investment, and Security," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 191-213, 09.
- Meyer, Klaus E. & Estrin, Saul & Bhaumik, Sumon Kumar & Peng, Mike W., 2009. "Institutions, resources and entry strategies in emerging economies," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
- Edward L. Glaeser & Andrei Shleifer, 2002.
The Quarterly Journal of Economics,
MIT Press, vol. 117(4), pages 1193-1229, November.
- Edward L. Glaeser & Andrei Shleifer, 2001. "Legal Origins," NBER Working Papers 8272, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Andrei Shleifer, 2001. "Legal Origins," Harvard Institute of Economic Research Working Papers 1920, Harvard - Institute of Economic Research.
- Daron Acemoglu & Pol Antràs & Elhanan Helpman, 2007.
"Contracts and Technology Adoption,"
American Economic Review,
American Economic Association, vol. 97(3), pages 916-943, June.
- Beata S. Javorcik & Shang-Jin Wei, 2009.
"Corruption and Cross-Border Investment in Emerging Markets: Firm-Level Evidence,"
062009, Hong Kong Institute for Monetary Research.
- Javorcik, Beata S. & Wei, Shang-Jin, 2009. "Corruption and cross-border investment in emerging markets: Firm-level evidence," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 605-624, June.
- Chang-Bum Choi & Paul W Beamish, 2004. "Split management control and international joint venture performance," Journal of International Business Studies, Palgrave Macmillan, vol. 35(3), pages 201-215, May.
- Mattli, Walter, 2001. "Private Justice in a Global Economy: From Litigation to Arbitration," International Organization, Cambridge University Press, vol. 55(04), pages 919-947, September.
- Casella, Alessandra, 1996. "On market integration and the development of institutions: The case of international commercial arbitration," European Economic Review, Elsevier, vol. 40(1), pages 155-186, January.
- Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 334-64, October.
- Susheng Wang & Tian Zhu, 2005. "Control Allocation, Revenue Sharing, And Joint Ownership," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 895-915, 08.
- Shang-Jin Wei, 1997. "Why is Corruption So Much More Taxing Than Tax? Arbitrariness Kills," NBER Working Papers 6255, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster).
If references are entirely missing, you can add them using this form.