Japanese and Local Partners Commitment to IJVs: Psychological Consequences of Outcomes and Investments in the IJV Relati
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TomoakiSakano*** WasedaUniversity
Abstract. This study investigatedthe antecedentsof commitmentin IJVs from the major partners'perspective.Data were gatheredfrom Japanese and local partnersin IJVs located in eleven countriesand analyzedin structuralequationsmodels.Resultsindicatedthat commitmentis largelya functionof the perceivedbenefitsof the relationship, i.e., satisfactionand economicperformance.However,exploratory analysesof differencesbetweenlocal partnersand the Japanese suggestthat the effectsof psychologicalantecedentsmight be contingent on the strategicintent of the relationship. The Beamish and Banks [1987] extension of the theory of the multinational enterprise suggests that internationaljoint ventures (IJVs) reduce transaction costs and enhance revenue potential (see also Contractor [1990]). Transaction cost theory proposes that partners in successful cooperative relationships hold each other hostage by the mutual dedication of idiosyncratic assets to the relationship [Williamson 1985]. The mutual hostage situationhelps eliminate opportunistic behaviors by partners and increases the efficiency of the exchange. Strategic advantagesfor an IJV relationship include such benefits as entry into foreign marketsand transferof technology [Kogut 1988]. In spite of such argumentsfor the benefits of IJVs, data show that IJVs are inherently risky with failure or acquisition rates approaching 50% (e.g., Beamish [1985]). Researchers cite low profitability, control asymmetries, erosion of complementarityand strategicobjectives, conflict between partners,and cultural differences as reasons for attrition(e.g., Buckley and Casson [1988]; Contractor and Lorange [1988]). *JohnB. Cullen is Professorof Managementand Systems at WashingtonState University. His current research focuses on the management structure of IJVs and cross-cultural studies of ethical climates. **Jean L. Johnson is Assistant Professor of Marketing at WashingtonState University. She received her Ph.D. from the University of Nebraska-Lincoln in 1988. Her other researchinterests include the development and strategicrole of long-term interfirmrelationships andjoint venturerelationships. ***Tomoaki Sakano is Professor of Management at Waseda University, Tokyo, Japan. His current research focuses on interfirm buyer-seller relationships in the Japanese manufacturingand distributionsectors as well as joint ventures. Received: July 1992; Revised: December 1993, May & July 1994; Accepted:July 1994. 91
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JOURNALOF INTERNATIONALBUSINESS STUDIES,FIRST QUARTER1995
To explain IJV success, several authors extend the primarily calculative selfinterest rationale of transactioncost theory. They suggest that IJVs need more than a positive assessment of benefits versus costs. The successful IJV requiresa social psychological basis of cooperation. For example, Buckley and Casson [1988] argue that cooperationbecome
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