Revisiting Multinational firms' Tolerance for Joint Ventures: A Trust-Based approach
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Investigationof JVs has tendedto stress the outcome of collaboration(e.g., survival, control, performance)and does not adequatelyrecognize the inseparability of the outcome from the process [Parkhe 1993a; Hebert and Geringer 1993]. Parkhe [1993a] has criticized past empirical work on JVs for being haphazard in that researchershave not effectively built upon each other's work if the outcome being investigatedwas different.He arguesthat such an orientationignores critical issues pertaining to the relationship process that have the potential to link and bridge disparatework on JVs throughcore concepts like trust,reciprocity, opportunism, and forbearance. These concepts, which are interrelated, encompass behavioralvariablesat the heart of voluntaryinterfirmcooperation, and have a significant influence on the dynamics and eventual performance within interorganizationalcollaborationslike JVs. In this regard,Beamish [1985] *Anoop Madhok(Ph.D., McGill University)is an Assistant Professorof Managementat the David Eccles School of Business, Universityof Utah, Salt Lake City, UT 84112. His primaryresearchinterests are global strategicmanagement,transactioncost economics, internationalstrategicalliancesandmanagementof interfirmcollaborations. The authorwould like to thankKarinFladmoe-Lindquist,Steve Tallman,Louis Hebert,JanJorgensen,andthree anonymous reviewers whose comments significantly improved this paper. Steve Tallman'ssuggestions were especially helpful. Received:September1992; Revised:November 1993 & April 1994;Accepted:September1994. 117
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JOURNALOF INTERNATIONALBUSINESSSTUDIES,FIRSTQUARTER1995
found that the social dimension governing JV relationshipswas instrumentalin explainingpartof the dissatisfactionthatmanagersexperiencewith JVs. OWNERSHIP AND RELATIONSHIP-CENTEREDAPPROACHES TOWARDSJOINT VENTURES A majorcause for dissatisfactionwith JVs is that a dual hierarchy,arising as a result of sharedownership,results in a high potentialfor conflict. Conflicts of interestdue to divergentobjectives and operationalasymmetriesmay adversely affect a firm's flexibility in decisionmakingand its ability to coordinateglobally [Harrigan1985; Berg and Friedman1980; PorterandFuller 1986]. This hampers the efficient conductof its operations.One approachtowardsovercomingthe difficulties inherentin managingJVs is orientedprimarilytowardsthe issue of formal controlthroughownership[Stopfordand Wells 1972; Franko1971; GomesCasseres 1989]. In this paper,this approachis referredto as the ownership-centeredapproach.It suggests thata wholly owned subsidiaryprovidesthe firmwith the desired flexibility to coordinate activities globally and facilitates decisionmaking through more direct means of control, such as hierarchical fiat [Williamson 1975], availableas a result of ownership.In this way, it avoids the problemof managingconflict in JVs. StopfordandWells [1972] referto this as u
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