Sino-Foreign Joint Venture Performance

Abstract

Evaluating the performance of a joint venture is an important challenge. No consensus on the appropriate measure of performance has yet emerged. Relatively little of the research relating to performance has directly examined joint ventures between firms from advanced market economies and those from China (Glaister and Buckley 1994, Yan and Gray 1994b, Osland and Cavusgil 1996). Janger (1980), Lecraw (1984) and Schaan (1983) indicate that it is more difficult to achieve satisfactory joint venture performance in developing countries than in developed ones. Lee and Beamish (1995) point out that performance problems are costly not only to the parent companies, but also to the host country itself, owing to the social costs and economic disturbances associated with such problems. Performance requirements that are applied to joint ventures by developing countries often include local content and a stimulus to local employment. Government may present special conditions — through legal provisions, taxation structuring, and approval of expansion plans — that highlight the significance of joint venture performance criteria from the local perspective.