Strategic Motives and Selection Criteria in International Joint Ventures: Perspectives of UK Firms and Foreign Firms

Abstract

International joint ventures have become a crucial part of the strategy of many firms (Harrigan, 1985, 1988; Bleeke and Ernst, 1993), with an increase over the past two decades in the incidence of joint venture formation between firms from developed market economies (Anderson, 1990; Hergert and Morris, 1988). Firms have increasingly adopted joint ventures as a purposeful strategic response to changing market conditions, often forming them with their direct competitors, and this trend is likely to persist (Badaracco, 1991; Yoshino and Rangan, 1995). A number of underlying reasons have been advanced for the growth of joint venture formation in recent years with the increased globalization of markets, higher levels of technological, market and capital risk, and the high investment costs of alternative forms of firm growth being highlighted (see Goold, Campbell and Alexander, 1994, Appendix D for a summary). A number of theoretical perspectives have been developed for joint venture formation, the most prominent being those based on the transaction cost approach (Hennart, 1988, 1991; Beamish and Banks, 1987; Buckley and Casson, 1988), organizational learning (Kogut, 1988; Hamel, 1991; Mody, 1993) and resource dependency (Pfeffer and Nowak, 1976).