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Host-country policies and MNE management control in IJVs: Evidence from China

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  • Dong Chen

    (Department of Management, College of Business Administration, Loyola Marymount University, Los Angeles, USA)

  • Yongsun Paik

    (Department of Management, College of Business Administration, Loyola Marymount University, Los Angeles, USA)

  • Seung Ho Park

    (Skolkovo Institute for Emerging Market Studies, Moscow School of Management, Beijing, China)

Abstract

In international joint ventures (IJVs), partner firms exert three types of management control: output, process, and social. Since management control critically influences IJV success, it is essential to understand what factors drive the development of the control system. Prior studies have focused mainly on IJVs’ internal conditions, and have largely neglected external institutional influences on IJV control. In this study we explore how host-country policies affect MNE partners’ control over their IJVs. Using a sample of IJVs in China, we find that MNE partners tend to exercise less output and process control when minority equity restriction is present, greater process control when they receive government incentives, and less social control when they are required to partner with state-owned enterprises. In contrast, the results of a post hoc analysis show that local partners’ control activities are not significantly influenced by these policies. Our findings provide new insights into IJV management by demonstrating the impacts of regulatory institutions on partners’ control activities.

Suggested Citation

  • Dong Chen & Yongsun Paik & Seung Ho Park, 2010. "Host-country policies and MNE management control in IJVs: Evidence from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 526-537, April.
  • Handle: RePEc:pal:jintbs:v:41:y:2010:i:3:p:526-537
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    Cited by:

    1. Li, Jizhong & Jiang, Fuming & Shen, Jie, 2016. "Institutional distance and the quality of the headquarters–subsidiary relationship: The moderating role of the institutionalization of headquarters’ practices in subsidiaries," International Business Review, Elsevier, vol. 25(2), pages 589-603.
    2. repec:eee:jbrese:v:76:y:2017:i:c:p:98-107 is not listed on IDEAS
    3. repec:spr:manint:v:54:y:2014:i:5:d:10.1007_s11575-014-0218-3 is not listed on IDEAS
    4. Jeffrey J. Reuer & Elko Klijn & Constantinos S. Lioukas, 2014. "Board involvement in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1626-1644, November.
    5. Bangara, Athena & Freeman, Susan & Schroder, William, 2012. "Legitimacy and accelerated internationalisation: An Indian perspective," Journal of World Business, Elsevier, vol. 47(4), pages 623-634.

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