Revisiting multinational firms' tolerance for joint ventures: a trust-based approach
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Revisiting multinational firms’ tolerance for joint ventures: a trust-based approach Anoop Madhok Schulich School of Business, York University, Toronto, Canada Formerly of the University of Utah, Salt Lake City, USA Correspondence: Anoop Madhok, Schulich School of Business, York University, 4700 Keele Street Toronto, ON M3J IP3 Canada. Tel: +1 416 736 5059; Fax: +1 416 650 8174; E-mail: [email protected]
Online publication date: 28 July 2005
Abstract In spite of the increasing popularity of international joint ventures, managers express a high level of dissatisfaction with them. This paper argues that overemphasis on the outcome has resulted in a neglect of the social processes underlying the outcome. The paper elaborates upon the rationale for a cooperative approach towards interorganizational collaborative relationships based on trust, and discusses it in the context of joint ventures. This is then applied towards understanding multinational ownership preferences and tolerance for joint ventures. It is argued that trust-centered logic is largely consistent with approaches that emphasize the issue of ownership, and deepens and enriches the insights provided by the latter. A shift in focus from ownership to relational dynamics is encouraged. Journal of International Business Studies (2006) 37, 30–43. doi:10.1057/palgrave.jibs.8400161
Introduction International joint venture activity has been increasing in recent years, both in terms of frequency and strategic importance (Geringer and Hebe´rt, 1991). In spite of the rising popularity of joint ventures (JVs), there is significant dissatisfaction with their performance (Beamish, 1988). This is intuitively inconsistent and indicates that, although firms perceive the need for JVs, they find them difficult to manage. Considering their increasing popularity, it is important to address this inconsistency. Investigation of JVs has tended to stress the outcome of collaboration (e.g., survival, control, performance) and does not adequately recognize the inseparability of the outcome from the process (Hebe´rt and Geringer, 1993; Parkhe, 1993a). Parkhe (1993a) has criticized past empirical work on JVs for being haphazard in that researchers have not effectively built upon each other’s work if the outcome being investigated was different. He argues that such an orientation ignores critical issues pertaining to the relationship process that have the potential to link and bridge disparate work on JVs through core concepts like trust, reciprocity, opportunism, and forbearance. These concepts, which are interrelated, encompass behavioral variables at the heart of voluntary interfirm cooperation, and have a significant influence on the dynamics and eventual performance within interorganizational collaborations like JVs. In this regard, Beamish (1985) found that the social
Trust in joint ventures
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dimension governing JV relat
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