Contracting institutions and ownership structure in international joint ventures
This 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.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Edward L. Glaeser & Andrei Shleifer, 2001.
Harvard Institute of Economic Research Working Papers
1920, Harvard - Institute of Economic Research.
- 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.
- Avinash Dixit, 2011. "International Trade, Foreign Direct Investment, and Security," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 191-213, 09.
- Gennaioli, Nicola, 2011.
"Optimal Contracts with Enforcement Risk,"
CEPR Discussion Papers
8405, C.E.P.R. Discussion Papers.
- Daron Acemoglu & Pol Antràs & Elhanan Helpman, 2007.
"Contracts and Technology Adoption,"
American Economic Review,
American Economic Association, vol. 97(3), pages 916-943, June.
- 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.
- Chong-En Bai & Zhigang Tao & Changqi Wu, 2004. "Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 277-305, Summer.
- 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.
- 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.
- 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.
- Bond Philip, 2009. "Contracting in the Presence of Judicial Agency," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-34, November.
- 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.
- Klaus E. Meyer & Saul Estrin & Sumon Kumar Bhaumik & Mike W. Peng, 2009. "Institutions, resources and entry strategies in emerging economies," LSE Research Online Documents on Economics 4217, London School of Economics and Political Science, LSE Library.
- Sugato Bhattacharyya & Francine Lafontaine, 1995. "Double-Sided Moral Hazard and the Nature of Share Contracts," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 761-781, Winter.
- 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.
- 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.
- Hay, Jonathan R. & Shleifer, Andrei & Vishny, Robert W., 1996. "Toward a theory of legal reform," European Economic Review, Elsevier, vol. 40(3-5), pages 559-567, April.
- 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.
- Daron Acemoglu & Simon Johnson, 2005.
Journal of Political Economy,
University of Chicago Press, vol. 113(5), pages 949-995, October.
- Moenius, Johannes & Berkowitz, Daniel, 2011. "Law, trade, and development," Journal of Development Economics, Elsevier, vol. 96(2), pages 451-460, November.
- 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.
When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:103:y:2013:i:c:p:124-132. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.