International Joint Venturing in the Steel Industry: A Theoretical Perspective

This paper explores the conceptual models of international joint ventures from the economics perspective. Various economic models suggest that foreign direct investment in the U S. steel industry made good sense. Threats of import restriction, a desperate need for capital for modernization, and the existing oveå œcapacity of the industry all suggest that foreign acquisitions were economically justified. The organizatioml economic views of transaction cost and resource-based models accurately predicted that the Asian partners would offer important capabilities that were closely tied to their organizational competencies，requiring a degree of integration possible only through ownership. They imply that the jimerican sides must have offered similar capabilities to jusify using joint ventures while offering little in the way of direct productive value to be derived from retaining the American parent companies as partners.