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Inter-partner Credible Threat in International Joint Ventures: An Infinitely Repeated Prisoner's Dilemma Model

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  • Yan Zhang

    (Rice University)

  • Nandini Rajagopalan

    (University of Southern California)

Abstract

We use an infinitely repeated prisoner's dilemma model to examine the role of inter-partner credible threat in international joint ventures (IJVs). Inter-partner credible threat refers to the certainty of either partner's retaliation given the other partner's earlier cheating. We argue that inter-partner credible threat represents the first order determinant and partners' management control represents the second order determinant of partner payoffs. When inter-partner credible threat is present, both partners achieve balanced payoffs whereas when it is absent, partners' relative control will determine their relative payoffs. In-depth interview data from four IJVs in China provide preliminary support for our theoretical arguments.© 2002 JIBS. Journal of International Business Studies (2002) 33, 457–478

Suggested Citation

  • Yan Zhang & Nandini Rajagopalan, 2002. "Inter-partner Credible Threat in International Joint Ventures: An Infinitely Repeated Prisoner's Dilemma Model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(3), pages 457-478, September.
    • Handle: RePEc:pal:jintbs:v:33:y:2002:i:3:p:457-478
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    Cited by:

    1. Diemo Urbig & Katrin Muehlfeld & Vivien Procher & Arjen Witteloostuijn, 2020. "Strategic Decision-Making in a Global Context: The Comprehension Effect of Foreign Language Use on Cooperation," Management International Review, Springer, vol. 60(3), pages 351-385, June.
    2. Ali, Tahir & Khalid, Saba & Shahzad, Khuram & Larimo, Jorma, 2021. "Managing international joint ventures to improve performance: The role of structural and social mechanisms," International Business Review, Elsevier, vol. 30(3).
    3. 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.
    4. Ott, Ursula F., 2015. "Repeated moral hazard in international joint ventures: Inter-temporal culturally sensitive incentive schemes for hidden action," Research in International Business and Finance, Elsevier, vol. 35(C), pages 166-179.
    5. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    6. 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.
    7. Garry D. Bruton & Chung‐Ming Lau, 2008. "Asian Management Research: Status Today and Future Outlook," Journal of Management Studies, Wiley Blackwell, vol. 45(3), pages 636-659, May.
    8. Jiang, Marshall S. & Chu, Rongwei & Pan, Yigang, 2011. "Anticipated duration of international joint ventures: A transaction cost perspective," Journal of International Management, Elsevier, vol. 17(2), pages 175-183, June.
    9. Taotao Chen & Afonso Fleury & Maria Tereza Fleury & Xiao Chen, 2020. "Government, MNEs and Industry Development: A Perspective of Game Theory," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 1-26, June.
    10. Ott, Ursula F., 2013. "International Business Research and Game Theory: Looking beyond the Prisoner's Dilemma," International Business Review, Elsevier, vol. 22(2), pages 480-491.
    11. Sinnewe, Elisabeth & Charles, Michael B. & Keast, Robyn, 2016. "Australia's Cooperative Research Centre Program: A transaction cost theory perspective," Research Policy, Elsevier, vol. 45(1), pages 195-204.
    12. Kaufmann, Jeffrey B. & O'Neill, Hugh M., 2007. "Do culturally distant partners choose different types of joint ventures?," Journal of World Business, Elsevier, vol. 42(4), pages 435-448, December.

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