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The duration of international joint ventures an foreign wholly-owned subsidiaries

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  • Wing-Fai Leung

Abstract

An international joint venture is formed when the partners contribute different benefits to the venture. Each party learns from the others through the joint venture. However, the literature suggests that joint ventures are unstable. So it is hypothesized that, on average, an international joint venture will have a shorter duration than a foreign wholly-owned subsidiary. Data on US foreign direct investment (FDI) abroad and FDI in the United States are applied to test the instability of joint ventures. The proportional hazards model is applied while exponential distribution and Weibull distribution are used to cross-check the results. On the whole, the results are consistent with the hypothesis. In particular, the two types of US affiliates are significantly different in duration although the support for the hypothesis from FDI in the United States is weak.

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  • Wing-Fai Leung, 1997. "The duration of international joint ventures an foreign wholly-owned subsidiaries," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1255-1269.
    • Handle: RePEc:taf:applec:v:29:y:1997:i:10:p:1255-1269
    DOI: 10.1080/00036849700000016
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    Cited by:

    1. Elmar Lukas, 2005. "Sequential International Joint-Ventures and the Option to Choose," International Finance 0504007, University Library of Munich, Germany, revised 15 Nov 2005.
    2. Chen, Haiyang & Hu, Michael Y., 2002. "An analysis of determinants of entry mode and its impact on performance," International Business Review, Elsevier, vol. 11(2), pages 193-210, April.
    3. Xavier Meschi, 2005. "Apprentissage d’expériences des partenaires et survie des coentreprises," Revue Finance Contrôle Stratégie, revues.org, vol. 8(4), pages 121-152, December.
    4. Pierre-Xavier Meschi, & Edson Luiz Riccio, 2006. "Analyse longitudinale de l’impact du risque-pays et des différences culturelles sur la survie des coentreprises internationales au brésil entre 1974 et 2005," Revue Finance Contrôle Stratégie, revues.org, vol. 9(4), pages 87-111, December.
    5. Nguyen, Ha Thi Thu & Larimo, Jorma & Ghauri, Pervez, 2022. "Understanding foreign divestment: The impacts of economic and political friction," Journal of Business Research, Elsevier, vol. 139(C), pages 675-691.
    6. Lukas, Elmar, 2007. "Dynamic market entry and the value of flexibility in transitional international joint ventures," Review of Financial Economics, Elsevier, vol. 16(1), pages 91-110.
    7. Meschi, Pierre-Xavier & Wassmer, Ulrich, 2013. "The effect of foreign partner network embeddedness on international joint venture failure: Evidence from European firms’ investments in emerging economies," International Business Review, Elsevier, vol. 22(4), pages 713-724.
    8. Elmar Lukas, 2007. "Dynamic market entry and the value of flexibility in transitional international joint ventures," Review of Financial Economics, John Wiley & Sons, vol. 16(1), pages 91-110.
    9. Meschi, Pierre-Xavier & Riccio, Edson Luiz, 2008. "Country risk, national cultural differences between partners and survival of international joint ventures in Brazil," International Business Review, Elsevier, vol. 17(3), pages 250-266, June.

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