Conditional effects of justice on instability in international joint ventures

Instability is inherent in international joint ventures (IJVs) and thus factors that can cause IJV instability have received substantial research attention. Unfortunately, no research has attempted to investigate the antecedent factors that facilitate joint learning between IJV partners, which can stabilize an IJV. Based on resource dependence theory, this research theorizes that resource composition can determine not just the formation of an IJV but also its strategic direction (i.e., long- or short-term view). Specifically, it is argued that IJV partners could integrate their complementary resources to reduce instability through conducting joint learning and creating new knowledge, and that the relationship between IJV partners could influence this process. To investigate how resource complementarity, distributive justice, and procedural justice can stabilize an IJV through joint learning by IJV partners, this study relies on the survey of 124 IJVs in China and uses process conditional modeling to test the hypothesized moderated mediation. The findings suggest that low distributive justice and high procedural justice offer the optimal combination for enhancing the positive stabilizing effects of resource complementarity in IJVs through inter-partner joint learning. Counterintuitively though, a high level of distributive justice may increase IJV instability, as it emphasizes outcome division and individual interests. Theoretical and managerial implications of the findings are discussed.