Quotation Konara, Palitha, Stone, Zita, Mohr, Alexander. 2020. Explaining alternative termination modes of international joint ventures. International Marketing Review. 37 (6), 1121-1153.


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Abstract

Purpose – The authors combine options logic with transaction cost economics to explain why firms maintain, divest or buy out their international joint ventures (IJVs). It is suggested that a decline in environmental risk and higher partner-related risk makes a firm more likely to acquire an IJV but less likely to divest an IJV. The study also investigates how IJV age moderates the effects of a decline in environmental risk and higher partnerrelated risk. Design/methodology/approach – The study employs competing risks analyses to examine the drivers of different termination outcomes using a dataset consisting of 459 IJVs in the People’s Republic of China, of which 110 were either acquired or divested by their foreign parent. Findings – The study finds that changes in environmental risk and partner-related risk affect how firms terminate their IJVs in the People’s Republic of China. Specifically, the authors find that the effect of exogenous and endogenous risk are more pronounced for the acquisition of IJVs than for the divestment of IJVs. Research limitations/implications – The study contributes to international marketing research by complementing options logic with transaction cost economics to provide a theoretical explanation of the different ways in which IJVs in the People’s Republic of China are terminated. Practical implications – IJVs continue to be an important yet often unstable method to serve international markets. Our findings increase managers’ awareness of the effect that two important sources of risk may have on the termination of IJVs in the People’s Republic of China. Originality/value – The study provides novel insights into the effect that changes in exogenous and endogenous risk have on a firm’s choice of termination mode drawing on novel data on the different ways in which foreign firms have terminated their IJVs in the Peoples’ Republic of China.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal International Marketing Review
Citation Index SSCI
WU-Journal-Rating new MAR-B, STRAT-B, WH-B
Language English
Title Explaining alternative termination modes of international joint ventures
Volume 37
Number 6
Year 2020
Page from 1121
Page to 1153
Reviewed? Y
URL https://www.emerald.com/insight/content/doi/10.1108/IMR-02-2019-0085/full/html
DOI https://doi.org/10.1108/IMR-02-2019-0085
Open Access Y
Open Access Link https://www.emerald.com/insight/content/doi/10.1108/IMR-02-2019-0085/full/html

Associations

People
Mohr, Alexander (Details)
External
Konara, Palitha (University of Sussex, United Kingdom)
Stone, Zita (University of Kent, United Kingdom)
Organization
Institute for International Business (Mohr) (Details)
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