Academic journal article Management International Review

Human Resource Collaboration Issues in International Joint Ventures: A Study of US-Japanese Auto Supply IJVs

Academic journal article Management International Review

Human Resource Collaboration Issues in International Joint Ventures: A Study of US-Japanese Auto Supply IJVs

Article excerpt

Abstract

* One view of international joint ventures (IJVs) is that they represent a continuous negotiation of interests between parent organizations. Success or failure depends in large part, therefore, upon the collaborative attitudes held by those involved with the ongoing operation of the IJV.

* Based on a survey and follow-up interviews with US participants in US-based joint ventures between US and Japanese parent companies in the auto supply industry, the paper considers the influence of several context and interaction variables on the collaborative attitudes held by US IJV participants. Implications of the findings are discussed.

Key Results

* Results of the study indicate that the influence of context variables on collaborative attitudes is strongest if it is not filtered through the concerns associated with a participant's specific IJV tasks and responsibilities. Results also suggest that the influence of interaction variables is strongest when a basic level of communication has already been established.

Introduction

Since the times of merchants of Ancient Egypt and Mesopotamia who formed alliances to conduct overseas trade, joint ventures have come a long way. Today joint ventures, which involve creation of a new entity by at least two legally distinct organizations (the parents) to undertake a productive economic activity, represent perhaps the most potent business format in the global arena (Demir-bag/Mirza 2000, Yavas/Eroglu/Eroglu 1994). While mitigating incentives for opportunism by creating interdependence between the transacting parties Buckley/Casson 1988), joint ventures help firms cope effectively with the competitive and technological challenges inherent in today's dynamic and continuously evolving environment (Perlmutter/Heenan 1986, Geringer 1991) and enable them to reduce risk, attain economies of scale, overcome government-mandated investment barriers, and pool/exchange complementary technologies or other resources (Moxon/Geringer 1985, Porter/Fuller 1986, Contractor/Lorange 1988, Kogut 1988, Harrigan 1988). As long as the benefits derived from joint efforts minus the transaction costs specific to the formation and operation of the venture exceed those benefits derived from exploiting firm-specific advantages separately, a joint venture creates synergies and enhances economic rents to the partners (Beamish/Banks 1987) and is a more attractive entry choice mode than a wholly owned subsidiary (Makino/Neupert 2000).

Despite such potential benefits, joint ventures are not without their shortcomings and limitations. In fact, while the benefits of these partnerships have been highly publicized, estimates of unsatisfactory performance of international joint ventures (defined in this study as partnerships between companies from two different countries) range from 37% to more than 70% (Geringer/Hebert 1991), and many fall short of expectations and/or are disbanded prematurely (Harrigan 1984). The increasing popularity of international joint ventures (IJVs), coupled with their less than satisfactory success rates, have led researchers to scrutinize such arrangements more closely and conduct studies to understand factors contributing to their success or failure (Reuer 2000).

Prior studies show that success in joint ventures is influenced by commitment brought to the venture by the partners, control exercised by the partners, socio-cultural distance among partners, whether the partner is a government sector or a private sector organization, characteristics of products and services, R&D and advertising intensity, the amount of ties (whether the partners have other licensing agreements), import penetration, and host country's political system, economic development, legal system, government policy on foreign investment and, tax codes (for excellent reviews, see: Demirbag/Mirza 2000, Hu/Chen 1996). While these studies focusing on the macro-level structural determinants of joint venture success/failure have been enlightening and provide prescriptive guidelines for the initial development of the enterprise, far less research attention has been directed toward considering the micro-level behavioral dimensions of joint-venture management. …

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