does governance matter keiretsu alliances and asset specificity as sources of japanese competitive advantage this empirical study suggests that japanese competitive advantage in complex product industries is at least partly due to differences in value chain governance and interfirm asset co specialization comparative data are offered which indicate that u s firms rely largely on markets and hierarchies to facilitate exchange whereas japanese firms rely largely on hybrid governance or alliances the empirical findings suggest that japanese automotive firms value chains have been able to achieve a competitive advantage over their u s counterparts by effectively using hybrid alliance governance for three primary reasons 1 japanese automotive value chains are characterized by greater interfirm asset co specialization than u s chains in particular greater human asset co specialization between firms results in superior coordination information sharing and learning which is critical in complex product industries 2 hybrids alliances as employed by japanese automakers realize virtually all of the advan

social welfare cooperators advantage and the option of not playing the game the aa outline a model of how freedom to choose between playing and not playing particular pisoner s dilemma games can 1 increase social welfare and 2 provide relative gains to intending cooperators when cooperators are relatively more willing to play they will interact more frequently with each other and their pay off per encounter will be higher potentially higher than that of intending defectors the aa speculate about the cognitive processes that underlie this result

a managerial decision model of international cooperative venture formation this paper develops a model of international cooperative venture formation that is centered on the decisionmaking process of mne executives central issues for managerial decisions are developed from the organizational studies literature a framework delineating the sequence and criteria used in the decision to form international cooperative ventures is developed from these defined issues and from existing models propositions pertaining to the venture formation decision process are outlined

foreign entry cultural barriers and learning this paper examines the longevity of foreign entries hypotheses are developed on the mode start ups vs acquisitions and ownership structure wholly owned vs joint ventures in relation to cultural distance the hypotheses are tested within a framework of organizational learning using data on 225 entries that 13 dutch firms carried out from 1966 onwards results show that the presence of cultural barriers punctuates an organization s learning cultural distance is a prominent factor in foreign entry whenever this involves another firm requiring the firm to engage in double layered acculturation we also identify locational paths of learning the longevity of acquisitions is positively influenced by prior entries of the firm in the same country similarly the longevity of foreign entries in which the firm has a majority stake improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block

creating trust in piranha infested waters the confluence of buyer supplier and host country contexts research by dyer and chu 2000 suggests that trust in exchange varies significantly across borders and influences the level of trust in cross border exchange dyads however while this is a good start research has yet to develop the concept that not only can the countries of origin of the exchange partners influence the nature and outcomes of dyadic trust but also the country where the exchange dyad is located furthermore such home and host country differences may interact with dyad level differences in trust creation capabilities and influence trust violation and repair we develop a framework and propositions along these lines

toward a model for international business ethics this paper briefly examines the topic of business ethics and attempts to suggest a code of ethics for multinational firms while most companies have basic policies on employee integrity confidentiality and sexual harassment relatively few have established policies regarding bribery exploitive child labor human rights violations and other issues they may encounter in the global market place drake 1998 until recently very few companies had truly global operations consequently little attention was paid to the issue of ethical guidelines in a global context recent changes in international markets have led to an explosion of corporations with global operations and the need for a global code of ethics has grown commensurately in this paper we explore the issue of global business ethics and attempt to provide a framework for future discussion we also examine some of the unique difficulties surrounding the development of any set of global business standards key among these difficulties is the issue of competing ethical values in home and host countries

nash s theory of cooperative games as a predictor of the outcomes of buyer seller negotiations an experiment in media purchasing the authors report an experimental investigation of the ability of nash s theory of cooperative games to predict the outcomes of buyer seller negotiations using the purchase of media time as an ex

a cognitive miser theory of cooperators advantage the aa propose a new model of cooperators advantage depending neither on supplementary incentives nor on cooperators capacity to recognize and play selectively with other cooperators it depends rather on players making the play no play decision by the heuristic of projecting their own cooperate defect choices onto potential partners cooperators offer to play more often and fellow cooperators will more often accept their offer when certain boundary conditions are met this results in a higher expected payoff for cooperators than for defectors empirical support for this heuristic is suggested by expectations data from related social dilemma experiments moreover its use can be justified in bayesean terms our model brings behavioral decision theory s cognitive miser paradigm to bear on interdisciplinary concern with the evolution of cooperative behavior and shows how if other mechanisms provide a suitable initial kick cooperation can evolve in the absence of iteration and in large mobile societies

alliances in international governmental organizations regional trade agreement formation and multinational enterprise regionalization strategy abstract drawing from political science alliance theories we explain why countries are likely to enter regional trade agreements we argue that the probability that this will happen is higher if the countries are allies in the same international governmental organizations igos as such alliances can help build trust and reduce political risk our results show that igo scope and also partner reliability and influence in the igo network play important roles our findings provide guidance to multinational enterprises in formulating regionalization strategies

trust and performance in cross border marketing partnerships a behavioral approach existing research on international partnerships focuses primarily on the ex ante structuring of interorganizational relationships this study departs from this research by taking a behavioral approach to understand the ex post maintenance of cross border marketing partnerships a conceptual model is developed by identifying the antecedents of trust and performance in such partnerships the model is empirically tested on a sample of u s firms having distributor and licensing relationships with firms from asia europe and central south america findings support the importance of bilateral relational norms and informal monitoring mechanism in building interorganizational trust and improving market performance of international partnerships

group formation and cooperation in social dilemmas a survey and meta analytic evidence abstract we survey the growing literature on group formation in the context of three types of social dilemma games public goods games common pool resources and the prisoner s dilemma the 62 surveyed papers study the effect of different sorting mechanisms endogenous endogenous with the option to play the game and exogenous on cooperation rates our survey shows that cooperators are highly sensitive to the presence of free riders independently of the sorting mechanism we complement the survey with a meta analysis showing no difference in terms of cooperation between studies implementing an endogenous and exogenous sorting what is more we find that it is no more likely for a cooperator to be matched with like minded partners in endogenously formed groups than in exogenously formed groups these observations are related as we show in the survey the success of a sorting method in matching like minded individuals and the levels of cooperation are closely interlinked

partner contributions as predictors of equity share in international joint ventures the type of expertise that a company contributes to a joint venture may affect the amount of equity that it owns this research observes the ownership patterns associated with four common combinations of partner expertise in international joint ventures the results rank company assets with respect to the contributor s ability to negotiate majority ownership in the original joint venture contract and that company s tendency to buy up equity from the partner later on

conducting international mail surveys the effect of incentives on response rates with an industry population mail surveys are one alternative for satisfying information needs about international markets to date minimal empirical research is available to inform academicians or practitioners of expected response rates or of the efficacy of incentives when undertaking mail surveys across disparate cultures the results from a study conducted in six countries suggests that an inexpensive and perhaps symbolic incentive such as a commemorative stamp can significantly increase response rates for academicians conducting cross cultural research the mail survey may be the most cost effective data collection method

cross cultural interaction the international comparison fallacy international management studies have been based primarily on the comparison of managerial behavior in countries around the world often these studies have implied that business people behave similarly with their domestic colleagues as with their foreign counterparts in questioning that assumption this study tests whether intra cultural behavior accurately predicts cross cultural behavior using a negotiation simulation and a sample of 462 japanese american and canadian businesspeople behaviors in cross cultural negotiations were found to differ in some important ways from those in intra cultural negotiations

the persistence in volatility of the us term premium 1970 1986 abstract this paper examines the persistence of the volatility of the risk premia for excess holding period returns of the term structure using a garch m model of the conditional variance the finding of a high degree of persistence cannot be sustained once allowance is made for a structural break in the unconditional variance caused by a change in the operation of us monetary policy during 1979 1982

do country level institutional frameworks and interfirm governance arrangements substitute or complement in international business relationships interfirm relationships among partners from institutionally distant environments are subject to governance difficulties owing to the paucity of shared cognitive and regulatory frameworks we examine the potential of formal contracting and relational governance developed at the partnership level to overcome the formal and informal institutional gap at the country level empirical results from a sample of 184 international partnerships of large us firms support an overall substitutive relationship between informal institutional frameworks and interorganizational relational arrangements whereby the performance benefits of relational governance are reinforced at higher degrees of informal institutional distance contrastingly formal institutional frameworks and contractual governance are found to have a complementary relationship with performance gains from formal contracting undermined at higher degrees of formal distance

a model of cultural differences and international alliance performance we propose a model of cultural differences and international alliance performance to explain the ambiguous findings regarding the influence of national culture differences on alliance performance building on research on national organizational and professional cultures we argue that the closer the domain of a social group is to the value creating activities of an alliance the more disruptive cultural differences between the partners members of that social group will be organizational culture differences will tend to be more disruptive than national culture differences and differences in the professional culture most relevant to alliance value creation typically will be the most disruptive implications for research and managerial practice are discussed and the model s relevance for international r d alliances is highlighted

strategic determinants of partner selection criteria in international joint ventures prior studies are vague regarding determinants of criteria for selecting complementary partners for international joint ventures ijvs this paper first distinguishes task and partner related dimensions of selection criteria the paper then argues that relative importance of task related selection criteria is determined by the strategic context of the proposed ijv and the parent firm specifically the critical success factors of the venture s competitive environment and the parent s static and dynamic position vis a vis these factors

different goods different effects exploring the effects of generalized social trust in large n collective action does generalized social trust help solve large n collective action problems this paper argues so offering a novel explanation for the relationship people tend to cooperate if they expect others to be cooperating which implies that people holding generalized social trust more readily cooperate in large n dilemmas because they expect that most people will cooperate the paper tests the explanation in a rigorous design the analyses show a positive robust effect of generalized social trust on public good provision but no effect is found in a joint product situation this supports the hypothesis indicating that trust specifically enhances cooperation in collective action dilemmas

explaining the swollen middle why most transactions are a mix of market and hierarchy why are firms sometimes more efficient than markets at organizing transactions why are most transactions arrayed neither at the pure market nor at the pure hierarchy end of the continuum but rather in the swollen middle incorporating features of both market and hierarchy why don t firms make greater use of price incentives this paper addresses these three questions by developing a model of the choice of institution one key building block is the distinction between organizing methods hierarchy and the price system and institutions firms and markets hierarchy and the price system are two distinct methods for organizing transactions each with particular costs and benefits markets and firms are institutions which use one or both of these methods although markets predominantly use prices and firms rely principally on hierarchy there is not a one to one correspondence between prices and markets or between hierarchy and firms indeed the paper argues that it is generally more efficient to use a mix of both methods than to specialize in either the paper focuses on the enforcement properties of prices and hierarchy hierarchy controls individuals directly by constraining their behavior by imposing behavior constraints while prices do it indirectly by measuring their outputs through price constraints under hierarchy individuals receive a salary to do as told while self employed individuals governed by the price system are rewarded on the basis of their output each system has its own biases using prices maximizes effort minimizes shirking but incites individuals to inflate the price and or reduce the quality of their output it encourages cheating relying on hierarchy results in the opposite bias under hierarchy individuals are not paid in function of their output but instead are rewarded for following directives they have thus strong incentives to minimize effort to shirk unless properly supervised but being paid a fixed sum to follow orders they have few incentives to cheat hence the price system experiences low shirking but potentially high cheating costs while hierarchy faces low cheating but high shirking costs organizing costs are the sum of shirking and cheating costs any given transaction will be organized by the mix of price and hierarchy i e by the mix of price and behavior constraints that minimizes organizing costs a transaction will be organized within a firm if the reduction in cheating costs achieved by replacing price constraints by behavior constraints exceeds the resulting increase in shirking costs and by the market in the opposite case the paper shows that cheating and shirking costs increase more than proportionately as one concentrates in either pure price or behavior constraints hence using a mix of both methods generally minimizes the sum of cheating and shirking costs this explains why most transactions exhibit features of both markets and hierarchy the paper shows clearly the tradeoff involved between price and behavior constraints it explains the costs and benefits of using two types of price incentives in firms piecework and profit centers and predicts when they will be used

inter organizational trust and the dynamics of distrust early research on inter organizational trust drew on theories about social ties among individuals for example duration of ties and amount of interaction yet these proved inadequate to explain the diverse arrangements arising in international business dyer and chu s award winning jibs paper demonstrated that trust was best predicted by organizational processes that developed positive expectations of predictability reliability and competence not only within national boundaries but also in cross national relationships this review of recent trust research building on dyer and chu draws attention to six themes 1 new conceptualizations that explore identity roles and rules as foundations of presumptive trust at the organizational level 2 dynamics of trust and distrust over time how violations of trust are interpreted and what affects ease of repair 3 pendulum swings in inter organizational relationships arising from plural governance and alternation between modes but also resulting in the continuous coexistence of positive and negative states 4 the impact of intra organizational conflict and inter organizational coalitions on the establishment and maintenance of trust 5 the relative impact of nation level vs organization level differences in culture as influences on trust and 6 whether intermediate modes of exchange in between transactional and relational modes are unstable transitional hybrids or embody complementarities that yield both value and stability

an integrated anti opportunism system in international exchange building on economic and social exchange theories this study develops an integrated model in which curtailing opportunism in international joint ventures ijvs requires four interrelated sets of suppressing forces 1 contractual ordering contractual inclusiveness and contractual obligatoriness 2 structural ordering managerial governance and equity captiveness 3 relational ordering interparty attachment and boundary spanner ties and 4 justice ordering procedural justice and distributive justice using a sample of 192 ijvs in an emerging market this study finds general support for our theoretical model our research validates that countering opportunism involves a system wide effort that integrates economic and social mandates unifies ex ante and ex post mechanisms controls both egoistic and non egoistic motivations and combines organizational level and individual level forces for partners from individualist cultures economic ordering forces contractual and structural are stronger than social ordering forces relational and justice in relation to opportunism resistance whereas for partners from a collectivistic culture social ordering forces are relatively stronger than economic ordering forces for this end

a behavioral perspective on negotiating international alliance this study examines the influence tactics of senior u s executives in negotiating international business alliances the strategy literature on alliances and the behavioral literature on negotiations were incorporated into a behavioral model of alliance negotiations constructs identified from transaction cost power dependence and game theories were integrated and linked to hypotheses describing negotiators influence tactics in alliance negotiations in examining eighty three alliance negotiations negotiator trust perception of a partner firm s alternatives conflict frame time horizon and cultural distance were found to affect negotiators tactics

social knowledge as a control system a proposition and evidence from the japanese fdi behavior building upon the concept of clans this paper introduces the value of social knowledge as a control mechanism available for an mnc to manage its foreign subsidiaries social knowledge is defined as one s ability to understand and predict others general patterns of behavior the hypotheses are empirically tested with japanese fdi data into four host countries the united states singapore taiwan and korea the results offer broad support for the proposition that for mncs with social knowledge the need to resort to ownership for control purposes is reduced

a multilevel approach to trust in joint ventures this article examines issues of level in the study of joint venture trust in particular we explain how international joint venture ijv trust can be conceptualized and measured at the person group and firm levels to do this we 1 provide a definition of ijv trust applicable to persons groups and firms 2 promote alignment of levels of theory and measurement through the use of a 3 3 approach to guide researchers in identifying the level at which they are theorizing and the proper level of measurement and 3 propose operational measures of ijv trust across levels and dimensions in order to lay a solid foundation for theory testing

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

on the future of international joint venture research international joint ventures ijvs are an important type of international strategic alliance isa and have been studied by scholars for decades resulting in a plethora of empirical studies publications and reviews yet an inadequate accumulation of knowledge exists as a closer look reveals much more than providing a summary and critical assessment of past contributions this paper develops an expansive research agenda based upon a deep understanding of past research and comprehensive frameworks that distill this research we identify a number of research opportunities that would not only advance ijv research but also closely related literatures and disciplines such as isas theories of the multinational firm international business research and strategic management

the trusted general manager and business unit performance empirical evidence of a competitive advantage employee trust for the general manager is proposed as an internal organizational characteristic that provides a competitive advantage for the firm this paper empirically examines the relationship between trust for a business unit s general manager and organizational performance trust was found to be significantly related to sales profits and employee turnover in the restaurant industry managers who were either more or less trusted differed significantly in perceptions of their ability benevolence and integrity copyright 2000 john wiley sons ltd

trust between international joint venture partners effects of home countries trust is an important factor in interorganizational relations interorganizational trust in cross border relationships is likely to be influenced by the home countries of both partners using data on 165 international joint ventures ijvs we show that the perceived trustworthiness of an ijv partner is influenced by the general propensity to trust in the trustor s home country moreover the trustworthiness perceived by a focal parent firm is also affected by the home country of the other ijv partner this second effect is mitigated by experience between the partners

living in agreement with a contract the management of moral and viable firm stakeholder relationships in a contractual firm stakeholder relationship the participants are expected to act according to the agreement and for mutual benefit by acting against the agreement at the expense of the other participant however may result in higher individual profits within a short period of time building on the unlocked iterated prisoner s dilemma pd setting scanlon s scanlon t m 1998 what we owe to each other belknap press of harvard university press cambridge mass version of contractualism and the social dilemma literature this article considers what types of behaviors should be followed by both parties in an established firm stakeholder relationship in order to reach an outcome that is defensible both in terms of morality and viability it is argued that a normative foundation which advises firms and stakeholders to ground their behavior on principles that could not reasonably be rejected by others forms a basis for moral and viable behavior that can be expressed in the form of a strategic rule that excludes defection and utilizes the option to exit in response to the other participant s defection then a set of testable propositions is developed that describe how a firm and its stakeholders can further promote moral and viable relationships

purchasing power parity as a theory of international arbitrage in manufactured goods an empirical view of uk us prices in the 1970s this study treats purchasing power parity as a theory of arbitrage and seeks to test for its applicability at a disaggregated level evidence is found to suggest that arbitrage in individual markets cannot be easily aggregated due to different a adjustment periods across industries even at a disaggregated level the evidence does not suggest a long run arbitrage process of the type implied by relative purchasing power parity moreover the length of time which industries take to adjust to changes in foreign prices and the exchange rate is found to be related both to the domestic competitive environment and the extent to which the particular good is traded

effects of cultural ethnicity firm size and firm age on senior executives trust in their overseas business partners evidence from china we investigate trust relationships between senior business executives and their overseas partners drawing on the similarity attraction paradigm social categorization theory and the distinction between cognition and affect based trust we argue that executives trust their overseas partners differently depending on the partners cultural ethnicity in a field survey of 108 chinese senior executives we found that these executives have higher affect based trust in overseas partners of the same cultural ethnicity as themselves cognition based trust is associated with affect based trust differently when overseas partners are of the same or different cultural ethnicity we also examine the role of relative firm size and age in shaping intra and intercultural trust relative firm size has a stronger negative effect on executives cognition based trust if their partners are of a different cultural ethnicity although firm age does not have a negative effect on executives affect based trust as hypothesized we found firm age to be positively associated with affect based trust for partners of the same cultural ethnicity we discuss theoretical and practical implications of this pattern of inter and intra cultural trust on international business and networking guanxi dynamics in china

the role of expatriates in the management of interdependence complexity and risk in multinational corporations a multilevel analysis of environmental country and organizational affiliate factors is used to explain the differential utilization rates of u s nationals in overseas professional positions of a major u s bank with 84 branches in 43 countries the research suggests that to the extent that the affiliates of a multinational corporation operate in environments with differing levels of political risk cultural distance and competition and have operations with different levels of complexity and interdependence a single staffing policy may be inappropriate

how much does trust really matter some reflections on the significance and implications of madhok s trust based approach madhok s 1995 article defined and developed a trust based perspective on the stability of international joint ventures ijvs proposing a shift in focus from ownership to relationship and from governance form to process the article emphasised the role of trust in holding ijvs together and the importance of considering the dynamics of inter organisational collaboration by distinguishing between structural and social components of trust it contributed to a more nuanced understanding of what makes inter firm partnership durable and able to realise its value potential this paper reviews madhok s original ideas and highlights the influence they have had on the field of international business it concludes with avenues for further research inspired by the article

revisiting multinational firms tolerance for joint ventures a trust based approach in spite of the increasing popularity of international joint ventures managers express a high level of dissatisfaction with them this paper argues that overemphasis on the outcome has resulted in a neglect of the social processes underlying the outcome the paper elaborates upon the rationale for a cooperative approach towards interorganizational collaborative relationships based on trust and discusses it in the context of joint ventures this is then applied towards understanding multinational ownership preferences and tolerance for joint ventures it is argued that trust centered logic is largely consistent with approaches that emphasize the issue of ownership and deepens and enriches the insights provided by the latter a shift in focus from ownership to relational dynamics is encouraged

setting the stage for trust and strategic integration in japanese u s cooperative alliances this study investigated the formation and outcomes of trust between partners in a specific form of strategic alliance not often studied the non equity based international cooperative alliance ica because a component of the investigation involved the reciprocal effects of trust in the ica relationship dyadic data were gathered from japanese and u s partners in 101 icas based in japan results showed that partner cultural sensitivity is an important contributor to trust building for both sides of the dyad complementarity with partner contributed to trust for the u s but not for the japanese similarity between ica partners led to trust for the japanese but not the u s partner the results also showed strong reciprocal effects of trust in the relationship and that trust of the ica partner leads the individual firm to integrate the ica into its own strategic framework

the cooperative venture formation process a latent variable structural modeling approach this article addresses management process issues for forming cooperative ventures with an increased likelihood of subsequent success based on roos 1989 the cooperative venture formation process is conceptualized in terms of three theoretical constructs the extent of sufficient internal push for the project the breadth and depth of analytical scope and the strength of key stakeholder support these constructs are related to subsequent perceived performance data from sixty seven firms were collected and analyzed via latent variable structural modeling a partial least square pls one key contribution of this article is the modeling approach to strategic formation process it contributes to an existing but not very well developed theory regarding strategy formation processes the pls method used in this study is quite unique within strategy research as such it contributes to methodology development in the strategy research field the main managerial implication is that the process by which a cooperative venture is formed should largely be seen as a step by step approach not a discrete decision if the three fundamentals discussed in the article are thoroughly addressed we can up the ante for success during implementation and therefore subsequent performance

when in rome the effects of cultural adaptation on intercultural business negotiations drawing on social identity and similarity attraction theories as well as empirical studies in intercultural communication hypotheses were developed to test the effects of three degrees of adaptive behaviors during intercultural buyer seller negotiations hypotheses covered both the positive and negative effects of adaptation on the adjudged interpersonal attractiveness of the adaptor these hypotheses were tested in two experimental studies using scenario based manipulations the first study looked at american subjects responses to adaptive behaviors of japanese business people to test the generalizability of these findings to a less familiar culture a replication looking at american subjects responses to adaptive behaviors of korean business people was also conducted the findings partially support the notion that moderate adaptation may be the optimal strategy in intercultural negotiations moderate adaptation was found to improve the adjudged attraction of the japanese business people relative to no adaptation and substantial adaptation however this finding was not replicated with korean business people

the determinants of trust in supplier automaker relationships in the us japan and korea we examine the determinants of trust in 453 supplier automaker relationships in the us japan and korea we define trust and derive a model of its determinants drawing upon 1 an embeddedness relationship based perspective 2 a process based perspective and 3 an economic hostage based perspective our findings indicate strong support for the process based perspective in all countries embeddedness was only important in japan and the economic hostage based variable stock ownership was not important in any country

the independence of tests for structural change in regression models abstract it is shown that the common tests for stability of regression coefficients and of the disturbance variance in linear regression models are independent this enables the size of the joint test procedure to be controlled exactly