Factors influencing international joint venture performance: Theoretical perspectives, assessment, and future directions

Abstract * Despite firms' increasing adoption of the international joint venture (IJV) as a strategic foreign market entry mode, there is widespread concern with their performance. Accordingly, a sizeable stream of research has focused on identifying factors conducive to superior IJV performance. However, considerable fragmentation and inconsistency in empirical findings has limited theory development and the advancement of management practice in this important field. * This article provides a systematic, analytical, and integrated assessment of over ninety empirical studies on drivers of IJV performance. In this context, empirical findings are evaluated across an integrated framework consisting of background, antecedent, core, and external variables. Emphasis is placed on isolating ways of enhancing the field's disciplinary maturity. Key Results * This assessment exercise shows confounding findings for the majority of hypothesised IJV performance drivers--including control and organizational learning aspects--even when accounting for study performance measure, time period, geographic focus, and level of analysis. Nonetheless, a range of factors demonstrates a consistent pattern of association with performance and, of these, relational parameters are perhaps the most important. Introduction Intensified technological and competitive challenges accompanying market globalization have resulted in the upsurge of international joint ventures over the past two decades (Beamish/Delios 1997a). (2) Despite the risk of greater resource commitment, IJV arrangements provide potentially better long-term financial payback in comparison with less resource-laden foreign market entry and expansion modes such as exporting, licensing, and contract manufacturing. The strategic importance of an IJV operation lies in that a firm can maintain more control over international business and enhance experiential knowledge, critical for further overseas commitments (Berdrow/Beamish 1999). Moreover, it may be neither feasible nor wise to compete in foreign markets via wholly owned production subsidiaries, as environmental risk or protectionist legislation may require local involvement (Blodgett 1992). Examination of the international business and strategic management literatures reveals that the identification of factors influencing IJV performance has received focal empirical attention. These studies have been stimulated by two major trends. First, the proliferation of IJVs as critical elements in an organization's business network and strategic weapons for competing within core markets (Harrigan 1986). Second, there is substantial evidence reporting unsatisfactory IJV performance (e.g., Beamish 1993, Hill/Hellriegel 1994); in fact, Beamish and Delios (1997b) reveal that an average of two in five IJVs are perpetual strugglers or outright failures. Thus, understanding IJV performance dynamics is vitally important to managers interested in developing and maintaining this type of cross-cultural strategic partnership. Notwithstanding both the theoretical and pragmatic contributions of empirical IJV performance research, study findings are distinguishable by a certain degree of fragmentation and inconsistency. This is due to: (1) the different theoretical underpinnings adopted by IJV studies; (2) the fact that many studies were conducted in isolation, with little regard for the findings of previous research; (3) the tendency to investigate simultaneously just a few of the many factors linked to IJV performance; (4) the use of disparate construct operationalizations and research designs; and (5) disregard for the influence of contextual externalities on IJV behavior and success (Geringer 1998, Parkhe 1993a). And in spite of the volume of research on the drivers of IJV performance, as yet there has been no systematic attempt to analyze, assimilate, and project existing knowledge. Earlier reviews of the IJV literature have offered valuable insights into performance issues and identified areas worthy of empirical investigation, but they centered on particular aspects--for instance, the control--performance relationship (Beamish 1985, Geringer/Hebert 1989) or IJV instability (Yan/Zeng 1999). …