Formation and performance of multi‐partner joint ventures: a Sino‐foreign illustration

Abstract

This study examines the factors influencing the number of partners forming an international joint venture (IJV) and the resultant outcome on performance. Various theoretical paradigms (such as strategic behavior, organizational learning, eclectic theory, socio‐cultural distance, and role theory) are drawn upon from the literature to develop a set of testable hypotheses which may assist in understanding the factors influencing the number of partners forming an IJV. Size (overall equity investment), control, socio‐cultural distance, industrial characteristics (technology and capital intensity) and location are used to differentiate the number of partners in an IJV. Additionally, an outcome orientation was taken to determine the impact of the number of partners on performance. Empirical findings, based upon Sino‐foreign IJVs, indicate that the number of partners involved with the cooperative agreement were positively associated with the size of the IJV, and differed across control and location of the IJV. Further, performance tended to increase as more partners were included within the IJV.

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