Intended and unintended termination of international joint ventures

Abstract

This study proposes that international joint ventures (IJVs) are terminated either when the initial purposes of the formation of the IJV have been achieved (intended termination), or when unanticipated contingencies that emerge in the external, internal, or inter-partner conditions after the establishment of the IJV impede the continuation of its operation (unintended termination). Our study examines the factors that affect intended and unintended termination and the longevity of IJVs. The findings show that approximately 90 percent of all IJV terminations are unintended and 10 percent intended, and that the frequency of intended termination and unintended termination varies noticeably depending on the initial purposes of formation. This suggests that the termination of IJVs is significantly contingent on their formation. The findings also show that the longevity of IJVs varies according to the initial purposes of formation, the initial conditions under which the IJV is formed, and the types of unanticipated contingencies that it encounters. The key theoretical issues and practical implications of the distinction between the intended and unintended termination of IJVs are also discussed.

The impact of partner diversity within multiparty international joint ventures

“…Cultural differences, in particular, have been highlighted as an important source of uncertainty, miscommunication, and conflicts in IJVs (Makino, Chan, Isobe, & Beamish, 2007). Increasing differences among partners thus raise and keep at a high level the uncertainty that exists with regard to the partner firms' inclination to behave opportunistically.…”

“…Since SDC platinum does not provide information about the termination of IJVs, we had to confirm the survival or termination of each IJV using online information such as news services and company websites. We decided, therefore, to randomly select 1,500 of which 57 had pre-determined expiry dates and were thus excluded given that the termination of such IJVs is less likely to be considered as a failure (e.g., Inkpen & Beamish, 1997;Makino, et al, 2007;Polidoro, Ahuja, & Mitchell, 2011;Yan & Zeng, 1999 …”

The antecedents of response strategies in strategic alliances

“…Alliance literature thus refers to exit as an alliance termination (e.g. Makino et al, 2007;Park and Ungson, 1997) that represents the ultimate and most destructive response to an adverse situation; once the alliance is dissolved, partner firms must find alternative ways to achieve their objectives. Voice is an attempt to overcome the adverse situation by considering own concerns, as well of those of the other party (Ping, 1997(Ping, , 2003, such that alliance managers actively and constructively discuss the situation with the intent to develop mutually satisfactory solutions (Geyskens and Steenkamp, 2000;Hibbard et al, 2001).…”

A circumplex model of the behavioural antecedents of unintended strategic alliance termination: a PLS-based analysis

“…Although an alliance may also end on a predetermined date or when the partners have realised their objectives, the extant alliance termination studies have considered dissolution to be an unintended event triggered by unanticipated contingencies (Makino et al, 2007). These contingencies span a wide variety of factors, the most critical of which being external environment, partner firm's behaviour, and inter-partner relational outcomes.…”

“…In particular, studies of how partners exit from alliances are virtually non-existent (for a notable exception, see Alajoutsijärvi et al, 2000). Most scholars consider alliance dissolution to be a natural and unavoidable stage in the life cycle of an alliance and have identified a wide range of environmental, inter-partner, and partner-related factors that influence alliance dissolution (Makino et al, 2007;Park & Ungson, 2001). Despite such important advances, these alliance termination studies tend to view alliance dissolution as a single event, which they treat as a black box, and neglect the process that leads to dissolution (Halinen & Tähtinen, 2002).…”