Joint-venture autonomy: Resource dependence and transaction costs perspectives

The literature on joint-ventures has emphasized the joint-venture as a "child" of dominant parent organizations without paying much attention to the internal processes of managing the joint-venture. In particular joint-ventures have the potential to develop strategy of their own and to make autonomous decisions. Autonomy as assessed by the extent to which joint-ventures can develop their own working practices and culture, and influence the outcome of ten other areas of decision-making forms the main dependent variable of this study. A survey of 57 U.K. domestic joint-venture companies is used to investigate the dimensions of joint-venture autonomy and finds that autonomy can vary greatly across types of decision issues. Greatest autonomy was found to occur over training and other staff issues, whereas the least autonomy occurred over new product development and pricing decisions. An explanatory model of joint-venture autonomy is developed using resource-dependence and transaction cost theories. It was found, in accordance with expectations, that high joint-venture dependence upon parent organizations, and high parental dependence upon the joint-venture, led to reduced autonomy. However, it was also found that high ambiguity of joint-venture objectives lead to decreased autonomy, a finding in accordance with the transaction costs hypothesis. One aspect of autonomy, cultural autonomy, was found to be independent of both dependence and ambiguity. The implications of these findings are discussed in terms of a potential dynamic theory of joint-venture autonomy whereby, as joint-ventures develop an internal culture, they can increasingly develop their own products and process.