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Investment and control in international joint ventures: the case of China

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  • Child, John
  • Yan, Yanni

Abstract

In this study, we explore several factors affecting the amount of control that foreign companies have over their joint ventures in China. Managers working in sixty-seven international joint ventures were asked to report the share of equity held by the Chinese and foreign partners; the extent to which each partner had contributed important non-capital resources; the ratio of IJV board members appointed by each partner; the nationality of managers holding key executive positions in the IJVs; and the amount of strategic and operational control that each partner enjoyed. Results showed that equity share is the major lever for the exercise of strategic control and also influences operational control through its effects on the appointment of board members and appointments to key executive positions. Results also showed that providing non-capital resources has a direct effect on operational control in addition to its indirect effect through appointments to key executive positions.

Suggested Citation

  • Child, John & Yan, Yanni, 1999. "Investment and control in international joint ventures: the case of China," Journal of World Business, Elsevier, vol. 34(1), pages 3-15, April.
  • Handle: RePEc:eee:worbus:v:34:y:1999:i:1:p:3-15
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    References listed on IDEAS

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    1. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(2), pages 235-254, June.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    3. repec:hrv:faseco:30728046 is not listed on IDEAS
    4. J Michael Geringer, 1991. "Strategic Determinants of Partner Selection Criteria in International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(1), pages 41-62, March.
    5. Donald J Lecraw, 1984. "Bargaining Power, Ownership, and Profitability of Transnational Corporations in Developing Countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(1), pages 27-43, March.
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    Cited by:

    1. Contractor, Farok J. & Woodley, James A., 2015. "How the alliance pie is split: Value appropriation by each partner in cross-border technology transfer alliances," Journal of World Business, Elsevier, vol. 50(3), pages 535-547.
    2. To, Chester K.M., 2016. "Collaboration modes, preconditions, and contingencies in organizational alliance: A comparative assessment," Journal of Business Research, Elsevier, vol. 69(11), pages 4737-4743.
    3. Jane Lu & Xufei Ma, 2015. "Partner resource asymmetry and IJV survival," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 1039-1064, December.
    4. Bhattacharyya, Asish K, 2005. "State, liberalization, and investment question: issues in corporate governance," MPRA Paper 47233, University Library of Munich, Germany, revised 2007.
    5. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    6. Karhunen, Päivi & Löfgren, Joan & Kosonen, Riitta, 2008. "Revisiting the relationship between ownership and control in international business operations: Lessons from transition economies," Journal of International Management, Elsevier, vol. 14(1), pages 78-88, March.
    7. Dominique Jolly, 2005. "The Exogamic Nature of Sino-Foreign Joint Ventures," Asia Pacific Journal of Management, Springer, vol. 22(3), pages 285-306, September.
    8. Li, Chengguang & Parboteeah, K. Praveen, 2015. "The effect of culture on the responsiveness of firms to mimetic forces: Imitative foreign joint venture entries into China, 1985–2003," Journal of World Business, Elsevier, vol. 50(3), pages 465-476.
    9. repec:spr:manint:v:48:y:2008:i:2:d:10.1007_s11575-008-0012-1 is not listed on IDEAS
    10. Bruton, Garry D. & Ahlstrom, David, 2003. "An institutional view of China's venture capital industry: Explaining the differences between China and the West," Journal of Business Venturing, Elsevier, vol. 18(2), pages 233-259, March.
    11. repec:eee:worbus:v:52:y:2017:i:6:p:819-830 is not listed on IDEAS
    12. Beamish, Paul W. & Lupton, Nathaniel C., 2016. "Cooperative strategies in international business and management: Reflections on the past 50 years and future directions," Journal of World Business, Elsevier, vol. 51(1), pages 163-175.
    13. Yan, Yanni & Child, John, 2004. "Investors' resource commitments and information reporting systems: control in international joint ventures," Journal of Business Research, Elsevier, vol. 57(4), pages 361-371, April.
    14. 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.
    15. Zhang, Si & Li, Na & Li, Jizhen, 2017. "Redefining relational rent," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 315-326.
    16. repec:spr:manint:v:54:y:2014:i:5:d:10.1007_s11575-014-0217-4 is not listed on IDEAS
    17. Sonya Wen & Cheng-Min Chuang, 2010. "To teach or to compete? A strategic dilemma of knowledge owners in international alliances," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 697-726, December.
    18. Chalos, Peter & O'Connor, Neale G., 2004. "Determinants of the use of various control mechanisms in US-Chinese joint ventures," Accounting, Organizations and Society, Elsevier, vol. 29(7), pages 591-608, October.

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