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Equity sharing in international joint ventures: an empirical analysis of strategic and environmental determinants

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  • Luo, Yadong

Abstract

Equity sharing in international joint ventures (IJVs) is a critical issue with implications for risk sharing, resource allocation, knowledge commitment, and organizational control. As a departure from previous research, this study aims to explore strategic antecedents and environmental dimensions underlying sharing arrangements. It argues that the structure of equity sharing controls the ex post degree of economic exposure or risk propensity, and boosts risk-adjusted returns earned from strategic resources or global integration. Analysis of data collected from IJVs in China suggests that strategic orientation, resource dependence, knowledge protection, and global integration as sought by MNEs are important antecedents of equity sharing. Equity sharing is an inverse function of host-country environmental complexity and hostility as perceived by MNE managers.

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  • Luo, Yadong, 2001. "Equity sharing in international joint ventures: an empirical analysis of strategic and environmental determinants," Journal of International Management, Elsevier, vol. 7(1), pages 31-58.
  • Handle: RePEc:eee:intman:v:7:y:2001:i:1:p:31-58
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    2. Globerman, Steven & Nielsen, Bo Bernhard, 2007. "Equity versus non-equity international strategic alliances involving Danish firms: An empirical investigation of the relative importance of partner and host country determinants," Journal of International Management, Elsevier, vol. 13(4), pages 449-471, December.
    3. Yameng Li & Ruosu Gao & Jingyi Wang, 2021. "Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda," JRFM, MDPI, vol. 14(10), pages 1-22, October.
    4. Kedia, Ben L. & Bilgili, Tsvetomira V., 2015. "When history matters: The effect of historical ties on the relationship between institutional distance and shares acquired," International Business Review, Elsevier, vol. 24(6), pages 921-934.
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    6. Kevin Zhou & Caroline Li, 2007. "How does strategic orientation matter in Chinese firms?," Asia Pacific Journal of Management, Springer, vol. 24(4), pages 447-466, December.
    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.
    8. Lobo Carla Azevedo & Fernandes Cristina & Ferreira João & Veiga Pedro M. & Gerschewski Stephan, 2023. "The Determinants of International Performance for Family Firms: Understanding the Effects of Resources, Capabilities, and Market Orientation," Entrepreneurship Research Journal, De Gruyter, vol. 13(3), pages 773-811, July.
    9. Cher-Hung Tseng, 2015. "Determinants of MNC’s Knowledge Inflows to Subsidiaries: A Perspective on Internalization Advantages," Management International Review, Springer, vol. 55(1), pages 119-150, February.
    10. Hu, Tiancheng, 2023. "Foreign ownership in joint ventures under knowledge leakage risks: The influence of industrial munificence and dynamism," Journal of Multinational Financial Management, Elsevier, vol. 68(C).
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