Contract, cooperation, and performance in international joint ventures

Abstract

This study examines how contract, cooperation, and performance are associated with one another within international joint ventures (IJVs). We argue that contract and cooperation are not substitutes but complements in relation to IJV performance. An IJV contract provides an institutional framework guiding the course of cooperation, while cooperation overcomes the adaptive limits of contracts. Our analysis of 293 IJVs in a dynamic market demonstrates that previous cooperation bolsters contractual adaptability, which in turn nurtures current cooperation between the same partners. We find that contract completeness and cooperation drive IJV performance both independently and interactively. When contracts are more complete, cooperation contributes more to performance. Contract and cooperation differ in their quadratic effects such that the contribution of contract completeness to performance declines as completeness increases but the contribution of cooperation remains linear. Copyright © 2002 John Wiley & Sons, Ltd.

The Two Facets of Collaboration: Cooperation and Coordination in Strategic Alliances

“…The complementary effects reported in these studies suggest that cooperation and coordination issues may be intricately interwoven, especially when it comes to adaptiveness, as in Luo's (2002) study, and sustained commitment to the alliance, as in Poppo and Zenger's (2002). Adaptiveness can be explained as a result of high-quality cooperation among partners that makes it easier to adjust existing coordination mechanisms flexibly.…”

“…Detailed up-front specification of 22 Note that in the Poppo and Zenger (2002) study, the sheer extent of coordination arrangements produces a complementary benefit to cooperation arrangements, independent of the effectiveness of those arrangements (i.e., their proximal outcomes). In Luo's (2002) study, however, it is the quality of cooperation, i.e., the level of achieved trust that underlies such complementarity. coordination mechanisms (during the design stage) makes successful coordination over the course of the partnership more likely, ensures efficient use of partners' contributions, reduces process losses, and provides clear guidelines for how partners will interact.…”

“…Some studies imply that the level of cooperation within a relationship can influence its adaptivenessand thus the quality of the coordination -and vice versa (Faems et al, 2008). Others point towards the possibility that cooperation and coordination-related relationship characteristics shape performance interactively rather than independently (Luo, 2002).…”

“…For example, Poppo and Zenger (2002) showed that the benefits of relational governance (a cooperation provision) are magnified by extensive contractual clauses for the administrative implementation of the relationship (a coordination mechanism). Luo (2002) suggested that contractual adaptiveness-an important aspect of effective coordination-has the greatest impact in high-trust relationships. 22 The anticipation of such complementarity benefits may also drive decisions to form alliances with potential partners that rank highly on cooperation criteria (e.g., prior relationships or indirect connections) and on coordination criteria (e.g., compatibility of resources) (Mitsuhashi & Greve, 2009).…”

Network Capitalism and the Role of Strategy, Contracts and Performance Expectations for Asia-Pacific Innovation Partnerships

“…Reuer & Ariño, 2003;Reuer, Ariño, & Mellewigt, 2006;Sampson, 2004), that is, partners use contracts to define mutual rights and obligations by specifying resource allocations, practices of interaction and problem solving, as well as expected outputs (e.g. Argyres, Bercovitz, & Mayer, 2007;Ariño & Reuer, 2006a;Lerner & Merges, 1998;Luo, 2002). These arrangements provide the basis for operating the partnership.…”