Configurations of International Joint Ventures (1)

Abstract * This study attempts to develop a numerically-derived taxonomy of approximately 300 international joint ventures (IJVs) between US manufacturing firms and their non-US partners. * Based on a literature review, the study identifies seven key constructs influencing the IJV formation activity of firms, and argues for the theoretical importance of engaging these constructs within a cluster analytic framework. Key Results * Results indicate four distinct clusters in the sample. These are labeled Asian prospectors, Global prospectors, Western Europe prospectors, and Developed country analyzers. Although firms in the Developed country cluster obtain statistically positive returns, these returns are not significantly different from those obtained by firms in each of the three remaining clusters. ********** The study of international joint ventures (IJVs) has received considerable theoretical and empirical attention during the last few years. Although numerous researchers have investigated the performance impact of conditions surrounding IJV formation, there is limited agreement about conditions associated with superior joint venture performance of participating firms. For example, there are at least as many studies who report that IJV formation announcements lead, on average, to an increase in the shareholder value of participating firms (e.g., Koh/Venkatraman 1991, Lummer/McConnell 1990) as those who report otherwise (e.g., Finnerty/Owers/Rogers 1986, Reuer/Miller 1997). Hence, it is interesting that only two published studies have identified 'strategic groups' of joint ventures and examined the performance impact of strategies adopted by firms in these groups (see Bresser/Dunbar/Jithendranathan 1994, Dussauge/Garrette 1995). The importance of identifying homogenous groups of competing firms lies in that such identification can highlight important 'within-group' strategy-performance relationships (Cool/Schendel 1987, Figenbaum/Thomas 1990) that would otherwise be obscured, and so assist in theory development (Ketchen/Thomas/ Snow 1993). In their study of the US savings and loan industry, Bresser et al. (1994) identified four major strategies adopted by firms in response to the industry's deregulation. One group of firms seemed to persist in strategies that emphasized the firms' traditional savings and loan business; the authors labeled this group as the "defenders" (Miles/Snow 1978). The second group, labeled "initiators", appeared to have pursued strategies that departed from industry tradition. Firms in the third and fourth groups, both labeled "prospectors" (Miles/Snow 1978), also experimented with new strategic options, albeit they did so by emphasizing distinct forms of collective strategies. The Bresser et al. (1994) study found that neither defenders nor prospectors obtained performance advantage, relative to each other, but reported that these groups differed with respect to their strategy-performance relationships. Although the changes introduced by initiators seemed to nullify traditionally recognized strategy-performance relationships, no new patterns emerged for firms in this group. More recently, Dussauge and Garrette (1995) investigated the relationship between strategic and organizational characteristics of firms in the global aerospace industry and the performance of equity and non-equity alliances among these firms. Their study identified four types of collaborative agreements, and found significant performance differences across firms in these groups: R&D agreements, Unstructured co-production projects, Semi-structured projects, and Business-based joint ventures. Despite their important contributions to a better understanding of strategy-performance relationships, the industry-specific nature of the above-mentioned studies restricts generalizability of their empirical findings (see Dussauge and Garrette 1995). A multi-industry taxonomic approach to the study of IJV performance therefore would extend insights developed by the above-mentioned studies, and make a useful contribution to the literature. …