Self‐Efficacy, Outcome Expectancy and Performance of International Joint Venture General Managers

With current trends of globalization and increasing competitive and technological challenges, joint ventures have become a critical component of many firms' international competitive strategies. These ventures involve two or more legally distinct organizations (the parents), each of which actively participates in the decision making activities of the jointly-owned entity (Geringer, 1988). It is considered to be an international joint venture (IJV) when at least one parent organization is headquartered outside the venture's country of operation, or if the venture has a significant level of operations in more than one country (Geringer & Hebert, 1989). Traditionally, many IJVs had been formed to exploit peripheral markets or technologies, and their activities were considered to be of marginal importance to the maintenance of a parent firm's competitive advantage. However, these ventures are increasingly viewed as strategic weapons for competing within critical multidomestic or global arenas (Harrigan, 1988a; Perlmutter & Heenan, 1986). Examination of data on American, European, and Canadian firms suggests that the frequency of IJVs is increasing, that most of the ventures established since 1975 have been formed between existing or potential competitors, and that most IJVs have involved products or markets which constitute the primary or "core" activities of the parent firms (Geringer & Woodcock, 1989; Harrigan, 1988a; Hergert & Morris, 1988). Despite their increased frequency and strategic importance, IJVs have tended to 6e short-lived (Blodgett, 1987; Harrigan, 1988a), although seldom by design, and they have frequently failed to achieve the objectives of their parent firms (Bleeke & Ernst, 1991). Prior studies have shown that the percentage of ventures performing unsatisfactorily has ranged from approximately 37% to over 70% (Deloitte, Haskins & Sells International, 1989; Geringer & Hebert, 1991; Harrigan, 1988a; Janger, 1980). Many of the performance problems experienced by IJVs have been linked to the unique managerial requirements of these ventures. The complexity associated with the presence of two or more parent organizations, which are often competitors as well as collaborators, often causes IJVs to be difficult to manage (Buckley & Casson, 1988; Geringer, 1991; Janger, 1980; Lynch, 1989; Woodcock & Geringer, 1991). The complexity is further exacerbated by the tendency to use IJVs in risky, uncertain settings where change is likely to occur (Anderson, 1990; Bleeke & Ernst, 1991), and to form these ventures among firms which differ substantially in culture and management practices (Dobkin, 1988; Frayne & Geringer, 1993; Harrigan, 1988b; Parkhe, 1991; Pucik, 1988). This can result in substantial transaction costs associated with coordination of and communication between parent organizations, as well as between parents and the IJV (Anderson & Gautignon, 1986; Brown, Rugman, & Verbeke, 1989; Geringer & Hebert, 1989; Hennart, 1988). Thus, performance problems of IJVs constitute a major concern for the parent firms, and effective management of these ventures poses a formidable challenge. There is an extensive literature on the important role played by the general manager (GM) in the operation of organizations (Aquilar, 1988; Barnard, 1938; Chandler, 1977; Kotter, 1982). The GM position is particularly critical to the effective management of IJVs (Bleeke Ernst, 1991; Deloitte, Haskins & Sells International, 1989; Frayne & Geringer, 1990, 1992; Lynch, 1989). In addition to running the IJV itself, the venture's GM must also manage relationships with each of the parent organizations, which often have conflicting motivations, operating policies, and cultures (Blodgett, 1987, 1991; Brown, Rugman, & Verbeke, 1989; Frayne & Geringer, 1993; Ganitsky & Watzke, 1990; Geringer, 1988, 1992; Geringer & Frayne, 1990; Schaan & Beamish, 1988; Sullivan & Peterson, 1982). …