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Effect of equity ownership on the survival of international joint ventures

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  • Charles Dhanaraj
  • Paul W. Beamish

Abstract

This note extends transaction cost analysis of international joint ventures (IJVs) to include explicitly the effect of equity. It challenges the common practice of treating all foreign investments with between 5 percent and 95 percent equity as IJVs. A fine‐grained analysis of the role of foreign equity ownership on the survival of 12,984 overseas subsidiaries confirms a declining, nonlinear, and asymmetrical relationship between equity and mortality in overseas subsidiaries. While investments involving small ownership levels ( 80%) have mortality rates comparable to that of wholly owned subsidiaries. Implications for research, practice, and policy are discussed. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Charles Dhanaraj & Paul W. Beamish, 2004. "Effect of equity ownership on the survival of international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 25(3), pages 295-305, March.
    • Handle: RePEc:bla:stratm:v:25:y:2004:i:3:p:295-305
    DOI: 10.1002/smj.372
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