Joint ventures around the globe from 1990–2000: Forms, types, industries, countries and ownership patterns

Abstract

Joint ventures (JVs) and alliances are important forms of inter‐organizational cooperation because they allow firms to achieve complex mutual tasks, otherwise impossible using simple arm's‐length contracts, but without actually acquiring one another. In light of recent trends in globalization, this feature of JVs and alliances is vital to multi‐national corporations (MNCs). These firms have complex operations, making simple arm's‐length contracts insufficient. MNCs are also very large, so that mergers and acquisitions and takeovers are extremely expensive. In this paper, we describe global trends in JVs and alliances for the period 1990 to 2000, utilizing the Thomson Financial SDC Platinum database. We survey the relevant literature on JVs and alliances, and provide a detailed description of the world of JVs and alliances as depicted by this database. We report a number of interesting facts regarding the forms and types of JVs and alliances, their industry and geographic distribution, and patterns of ownership.

What makes a joint venture: Micro‐evidence from Sino‐Italian contracts

“…To the best of our knowledge, this is the first attempt at collecting survey data on international partnerships at the contract, rather than country, industry or firm level, providing a comprehensive picture in terms of sample representation and topic coverage 2 . This markedly differentiates our contribution from previous studies aimed at providing an overview of general trends in inter‐firm alliances through already existing databases (see, for instance: Hagedoorn, 1996, 2002; Moskalev & Swensen, 2007; Morresi & Pezzi, 2011). Having designed the data‐collection questionnaire, we were able to include questions suitable to understand what makes a JV and to what extent the empirical evidence supports the theoretical predictions.…”

“…As the sharing rule can be implemented through the allocation of equities, we expect to observe a variety of ownership patterns reflecting the relative importance of each partner's input. This approach has been widely used to study the choice between wholly owned affiliates and partnerships as the entry mode across industries (as in Hagedoorn, 1996, 2002; Moskalev & Swensen, 2007) and markets (see, among others: Bontempi & Prodi, 2009; Gomes‐Casseres, 1989; Hennart & Larimo, 1998; Javorcik & Saggi, 2010; Makino & Neupert, 2000; Wei et al, 2005).…”

“…Over the same period, world flows of inward FDI rose by almost 900%, peaking at 1.9 trillion USD in 2007 (UNCTAD, 2011). A substantial share of these flows and stock is in partnership with local enterprises, with joint ventures (JVs) and international alliances playing a prominent role (Buchel, 2003; Moskalev & Swensen, 2007). The literature on the foreign entry mode focuses on equity JVs as opposed to wholly owned affiliates.…”

“…The well documented preference of Italian entrepreneurs for joint ventures vs. wholly foreign owned enterprises makes Italy a suitable focus of our study (see, among others: Bontempi & Prodi, 2009; Gattai, 2010; Morresi & Pezzi, 2011). The largest FDI recipient in the world after the US, China is known for shared ownership of foreign affiliates, even though wholly foreign owned enterprises have been allowed since the 1980s (Moskalev & Swensen, 2007). According to the China Statistical Yearbook (2012), over the period 2005–2011 JVs account for a notable 20% of total FDI inflows, both by number of projects and capital flows.…”

“…Having designed the data‐collection questionnaire, we were able to include questions suitable to understand what makes a JV and to what extent the empirical evidence supports the theoretical predictions. Hence, even if we narrow down the scope for research by adopting a single home/single host perspective and selecting JVs within the broader array of contracts considered in Hagedoorn (1996, 2002), Moskalev and Swensen (2007) and Morresi and Pezzi (2011), we still cover all classes of industries and firms and comment on a wider spectrum of contractual features adding to sector, country and ownership structure. As a result, our analysis is strongly complementary to previous ones.…”