Controlling international joint ventures: An investigation of Australian parent partners

Wiley-Blackwell Publishing Asia
Publication Type:
Journal Article
Australian Accounting Review, 2009, 19 (2), pp. 103 - 116
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From a strategic point of view, international joint ventures (IJV) are used to exploit peripheral markets or technologies, and are perceived as critical elements of an organisation's business networks, as strategic weapons for competing within core markets and technologies (Harrigan 1987), and as a way of facilitating inter-organisational learning (Buckley and Casson 1988; Hamel 1991; Makhija and Ganesh 1997). In addition, successful IJVs create synergies and enhance economic rents to the partners resulting from risk reduction, economies of scale and scope, production rationalisation, convergence of technologies, and better local acceptance (Harrigan 1988a, 1988b; Hennart 1988; Parkhe 1993). IJVs, therefore, represent an important and effective way for multinational organisations to compete globally (Perlmutter and Heenan 1986). The results suggest that Australian parent partners seek tighter formalised structures. This is an indication of greater extent of control achieved by using more formal bureaucratic methods. It could be argued that these choices may counter the limitations of narrow focus of control. Despite Australian parent partners formally controlling only a limited set of activities, they seek de facto dominant decision-making power in a wide range of strategically important functional areas, protecting, therefore, their overall interest in the venture.
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