IDEAS home Printed from https://ideas.repec.org/a/eee/iburev/v7y1998i4p423-441.html
   My bibliography  Save this article

The performance correlates of ownership control: a study of U.S. and European MNE joint ventures in India

Author

Listed:
  • Ramaswamy, Kannan
  • Gomes, Lenn
  • Veliyath, Rajaram

Abstract

This study reports findings from an empirical examination of the relationship between ownership control and joint venture performance. It conceptualized ownership control as a continuous variable so that the range of values of optimal equity holdings could be derived. Thus, it was possible to empirically determine both the form and strength of the relationship, aspects that prior studies have not addressed fully. The empirical examination was carried out on a longitudinal sample of joint ventures between U.S. and European MNEs and local firms in India. Results clearly show that the relationship between ownership control and performance is curvilinear. Contrary to the prevailing views that advocate an equal sharing of equity, performance was found to improve with increasingly unequal levels of ownership.

Suggested Citation

  • Ramaswamy, Kannan & Gomes, Lenn & Veliyath, Rajaram, 1998. "The performance correlates of ownership control: a study of U.S. and European MNE joint ventures in India," International Business Review, Elsevier, vol. 7(4), pages 423-441, August.
    • Handle: RePEc:eee:iburev:v:7:y:1998:i:4:p:423-441
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969593198000225
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(2), pages 235-254, June.
    2. Benjamin Gomes-Casseres, 1990. "Firm Ownership Preferences and Host Government Restrictions: An Integrated Approach," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 21(1), pages 1-22, March.
    3. Gregory G. Dess & Richard B. Robinson, 1984. "Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit," Strategic Management Journal, Wiley Blackwell, vol. 5(3), pages 265-273, July.
    4. Nathan Fagre & Louis T Wells, 1982. "Bargaining Power of Multinationals and Host Governments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 13(2), pages 9-24, June.
    5. Farok J Contractor, 1990. "Ownership Patterns of U.S. Joint Ventures Abroad and the Liberalization of Foreign Government Regulations in the 1980s: Evidence from the Benchmark Surveys," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 21(1), pages 55-73, March.
    6. Paul W Beamish & John C Banks, 1987. "Equity Joint Ventures and Theory of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 18(2), pages 1-16, June.
    7. J Michael Geringer & Louis Hebert, 1991. "Measuring Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(2), pages 249-263, June.
    8. Donald J Lecraw, 1984. "Bargaining Power, Ownership, and Profitability of Transnational Corporations in Developing Countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(1), pages 27-43, March.
    9. Jung Hoon Derick Sohn, 1994. "Social Knowledge as a Control System: A Proposition and Evidence from the Japanese FDI behavior," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(2), pages 295-324, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mukherjee, Debmalya & Kumar, Satish & Mukherjee, Deepraj & Goyal, Kirti, 2022. "Mapping five decades of international business and management research on India: A bibliometric analysis and future directions," Journal of Business Research, Elsevier, vol. 145(C), pages 864-891.
    2. Laure Dikmen & Foued Cheriet, 2021. "Different is beautiful? Effects of asymmetry on international joint-ventures performance [Différents, c'est mieux ? Analyse des effets de l'asymétrie entre les partenaires sur la performance des co," Working Papers hal-03166842, HAL.
    3. Marcela Porporato, 2009. "Timing and drivers of management control systems in joint ventures," Qualitative Research in Accounting & Management, Emerald Group Publishing Limited, vol. 6(4), pages 247-274, October.
    4. Williams, Christopher & Lukoianova (Vashchilko), Tatiana & Martinez, Candace A., 2017. "The moderating effect of bilateral investment treaty stringency on the relationship between political instability and subsidiary ownership choice," International Business Review, Elsevier, vol. 26(1), pages 1-11.
    5. Khalid, Saba & Ali, Tahir, 2017. "An integrated perspective of social exchange theory and transaction cost approach on the antecedents of trust in international joint ventures," International Business Review, Elsevier, vol. 26(3), pages 491-501.
    6. Ali, Tahir & Larimo, Jorma, 2016. "Managing opportunism in international joint ventures: The role of structural and social mechanisms," Scandinavian Journal of Management, Elsevier, vol. 32(2), pages 86-96.
    7. Somnath Lahiri, 2011. "India-focused publications in leading international business journals," Asia Pacific Journal of Management, Springer, vol. 28(2), pages 427-447, June.
    8. Larimo, Jorma & Le Nguyen, Huu & Ali, Tahir, 2016. "Performance measurement choices in international joint ventures: What factors drive them?," Journal of Business Research, Elsevier, vol. 69(2), pages 877-887.
    9. Nakamura, Masao, 2005. "Joint venture instability, learning and the relative bargaining power of the parent firms," International Business Review, Elsevier, vol. 14(4), pages 465-493, August.
    10. Dikmen, L. & Cheriet, F., 2021. "Different is beautiful? Effects of asymmetry on international joint-ventures performance," Working Papers MoISA 202101, UMR MoISA : Montpellier Interdisciplinary center on Sustainable Agri-food systems (social and nutritional sciences): CIHEAM-IAMM, CIRAD, INRAE, L'Institut Agro, Montpellier SupAgro, IRD - Montpellier, France.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paik, Yongsun & Sohn, Junghoon Derick, 2004. "Expatriate managers and MNC's ability to control international subsidiaries: the case of Japanese MNCs," Journal of World Business, Elsevier, vol. 39(1), pages 61-71, February.
    2. Lee, Ji-Ren & Chen, Wei-Ru & Kao, Charng, 1998. "Bargaining power and the trade-off between the ownership and control of international joint ventures in China," Journal of International Management, Elsevier, vol. 4(4), pages 353-385, December.
    3. Lee, Ji-Ren & Chen, Wei-Ru & Kao, Charng, 2003. "Determinants and performance impact of asymmetric governance structures in international joint ventures: an empirical investigation," Journal of Business Research, Elsevier, vol. 56(10), pages 815-828, October.
    4. Lu, Jane W. & Hebert, Louis, 2005. "Equity control and the survival of international joint ventures: a contingency approach," Journal of Business Research, Elsevier, vol. 58(6), pages 736-745, June.
    5. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    6. Hu, Michael Y. & Chen, Haiyang, 1996. "An empirical analysis of factors explaining foreign joint venture performance in China," Journal of Business Research, Elsevier, vol. 35(2), pages 165-173, February.
    7. repec:rdg:wpaper:em-dp2004-16 is not listed on IDEAS
    8. Peng, George Z., 2012. "FDI legitimacy and MNC subsidiary control: From legitimation to competition," Journal of International Management, Elsevier, vol. 18(2), pages 115-131.
    9. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "The costs of shared ownership: Evidence from international joint ventures," Journal of Financial Economics, Elsevier, vol. 73(2), pages 323-374, August.
    10. Yan, Aimin & Gray, Barbara, 2001. "Negotiating control and achieving performance in international joint ventures: A conceptual model," Journal of International Management, Elsevier, vol. 7(4), pages 295-315.
    11. Desai, Mihir A. & Hines Jr., James R., 1999. ""Basket cases": Tax incentives and international joint venture participation by American multinational firms," Journal of Public Economics, Elsevier, vol. 71(3), pages 379-402, March.
    12. Ming-Chang Huang & Ya-Ping Chiu, 2014. "The antecedents and outcome of control in IJVs: A control gap framework," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 245-269, March.
    13. Chris Changwha Chung & Paul W. Beamish, 2010. "The Trap of Continual Ownership Change in International Equity Joint Ventures," Organization Science, INFORMS, vol. 21(5), pages 995-1015, October.
    14. Pennings, Enrico & Sleuwaegen, Leo, 2004. "The choice and timing of foreign direct investment under uncertainty," Economic Modelling, Elsevier, vol. 21(6), pages 1101-1115, December.
    15. Daphne Yiu & Shige Makino, 2002. "The Choice Between Joint Venture and Wholly Owned Subsidiary: An Institutional Perspective," Organization Science, INFORMS, vol. 13(6), pages 667-683, December.
    16. Kumar, V. & Subramanian, Velavan, 1997. "A contingency framework for the mode of entry decision," Journal of World Business, Elsevier, vol. 32(1), pages 53-72, April.
    17. Pan, Yigang & Li, Xiaolian, 1998. "Alliance of foreign firms in equity joint ventures in China," International Business Review, Elsevier, vol. 7(4), pages 329-350, August.
    18. Demirbag, Mehmet & Mirza, Hafiz, 2000. "Factors affecting international joint venture success: an empirical analysis of foreign-local partner relationships and performance in joint ventures in Turkey," International Business Review, Elsevier, vol. 9(1), pages 1-35, February.
    19. repec:wsi:acsxxx:v:21:y:2019:i:08:n:s1363919619500130 is not listed on IDEAS
    20. Cuypers, I.R.P., 2009. "Essays on equity joint ventures, uncertainty and experience," Other publications TiSEM 8dc79e86-c625-467f-a450-8, Tilburg University, School of Economics and Management.
    21. Kyeong Hun Lee, 2018. "Cross‐border mergers and acquisitions amid political uncertainty: A bargaining perspective," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 2992-3005, November.
    22. Lin, Xiaohua & Wang, Cheng Lu, 2008. "Enforcement and performance: The role of ownership, legalism and trust in international joint ventures," Journal of World Business, Elsevier, vol. 43(3), pages 340-351, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iburev:v:7:y:1998:i:4:p:423-441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.