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What makes a joint venture: Micro-evidence from Sino-Italian contracts

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  • Gattai, Valeria
  • Natale, Piergiovanna

Abstract

This paper provides new contract-level evidence on control rights allocation in order to define what makes a joint venture. Property rights theory of the firm identifies circumstances under which joint control alleviates investment distortions due to contract incompleteness. We compare predictions of the theoretical literature with actual governance structures of Sino-Italian joint ventures, as reported in a questionnaire submitted to the entire population of Italian enterprises operating in China. With an exceptional response rate of 60%, our evidence confirms most of the theoretical predictions and helps select among competing approaches to model joint ventures.

Suggested Citation

  • Gattai, Valeria & Natale, Piergiovanna, 2013. "What makes a joint venture: Micro-evidence from Sino-Italian contracts," Review of Financial Economics, Elsevier, vol. 22(4), pages 194-205.
  • Handle: RePEc:eee:revfin:v:22:y:2013:i:4:p:194-205
    DOI: 10.1016/j.rfe.2013.08.005
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    Cited by:

    1. repec:bla:jecsur:v:31:y:2017:i:1:p:281-302 is not listed on IDEAS
    2. Müller, Daniel & Schmitz, Patrick W., 2016. "Transaction costs and the property rights approach to the theory of the firm," European Economic Review, Elsevier, vol. 87(C), pages 92-107.
    3. Schmitz, Patrick W., 2016. "The negotiators who knew too much: Transaction costs and incomplete information," Economics Letters, Elsevier, vol. 145(C), pages 33-37.

    More about this item

    Keywords

    Contract incompleteness; China; Italy; Joint venture;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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