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Kultur Dokumente
OF INTERNATIONALJOINT VENTURES
235
over the venture,the same argumentmight not be valid for IJVs where
the equitywasequallydividedbetweenparentsor in whicha firm had only
a minorityparticipationrole.Thislattersituationespeciallyconcernedfirms
that, overtime, wereunable to demandfull or dominantownershipposi-
tions in manyinternationalinvestments.With continueddiffusionof tech-
nology, increasedscale and risk accompanyingnew projects, increased
globalizationof many industriesand host governmentpolicies promoting
local equity participationin orderto obtain resourcesor marketaccess,
the option of implementingwholly-ownedor dominantownershipventures
has oftenbeenconstrained[Moxon& Geringer1985;Porter& Fuller1986].
In addressingsuchconcerns,Behrman[1970]as wellas Friedmanand Beguin
[1971]suggestedthat control was not a strict and automaticconsequence
of ownership.Accordingto these studies, a varietyof mechanismswere
availableto firms for exercisingeffectiveIJV control:right of veto, repre-
sentationin managementbodies and special agreementsrelatedto either
technology (e.g., licensing) or management(e.g., managementservices).
Companiesmight also be able to rely on their technicalsuperiorityand
managerialskillsas a means of guaranteeingparticipationin the manage-
mentof day-to-dayoperations.Thenominationof one of a firm'smanagers
as the IJVgeneralmanager[Rafii1978],as well as employmentof different
ownershipstructurearrangements[Gullander1976],couldrepresentfurther
means of exercisingmanagerialcontrol.
In extendingthis stream of research,Schann [1983] demonstratedthe
breadthof mechanismsavailableto parentfirmsfor exercisingcontrolover
their IJVs(Table1). Among these control options, the JV board of direc-
tors, formalagreements,the appointmentof keypersonnel,the JV planning
process,the reportingrelationshipsand a varietyof informalmechanisms
appearedto be particularlyimportantfor Schaan'ssample.He also made
a significant contributionto knowledgeof IJV control by categorizing
control mechanismsinto two main types. Schaan distinguishedpositive
control mechanisms,which parent firms employedin order to promote
certainbehaviors,from negativecontrolmechanisms,whichwereused by
a parentto stop or to preventthe IJV from implementingcertainactivities
or decisions. Positive control was most often exercisedthroughinformal
mechanisms,staffing, participationin the planningprocessand reporting
relationships.In contrast,negativecontrolreliedprincipallyon formalagree-
ments, approvalby parentsand the use of the JV boardof directors.These
latter,negativeforms of control exemplifiedwhat Child [1973]described
as bureaucraticmechanisms.
In additionto the mechanismsby whichcontrolmaybe exercised,a second
dimensionexaminedby scholarswasthe extentof controlexercisedoveran
IJV.Borrowingfromorganizationalbehaviorresearch,moststudiesexamin-
ing this latterdimensionhave conceptualizedcontrol as being dependent
upon the centralizationor the locus of the decisionmakingprocess. One
such study was Dang's [1977]researchon the autonomy of U.S. multi-
in the PhilippinesanndTaiwan.Undoubtedlyinfluenced
nationals'subsidiaries
INTERNATIONAL
JOINT VENTURES 239
TABLE1
Positive and Negative Control Mechanisms
Positive Negative
Ability to make specific decisions Board
Ability to design: Executive committee
1) Planning process Approvalrequiredfor.
2) Appropriationrequests 1) Specific decisions
Policies and procedures 2) Plans, budgets
Ability to set objectives for JVGM 3) Appropriationrequests
Contracts: 4) Nomination of JVGM
management ScreeninglNo objection of parent before
technology transfer ideas or projects are discussed with other
marketing parent
supplier
Participation in planning or budgeting
process
Parent organization structure
Reporting structure
Staffing
Trainingprograms
Staff services
Bonus of JVGMtied to parent results
Ability to decide on future promotion of
JVGM(and other JV managers)
Feedback; strategylplan budgets,
appropriationrequests
JVGMparticipation in parent's worldwide
meetings
Relations with JVGM;phone calls,
meetings, visits
Staffing parent with someone with
experience with JV
MNC level in Mexico
Informalmeetings with other parent
Source: J. L.Schaan, Parentcontrol and joint venturesuccess: Thecase of Mexico,249. Unpub-
lished doctoral dissertation, University of Western Ontario, 1983.
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248 JOURNALOF INTERNATIONALBUSINESSSTUDIES,SUMMER1989
TABLE 3
A Strategy-Control Model of JV Performance
INTERNATIONAL
STRATEGY FOCUS
SUBSIDIARY/JV
STRATEGY EXTENT4-* MECHANISMS
_
JV PERFORMANCE _
CONCLUSIONS
As corporationsincreasinglyutilize alliances such as IJVs as tools for
attainingstrategicobjectives,the issueof IJV controlis experiencing
a corre-
spondingincreasein attentionfromacademicsand practitionersalike.Yet,
understandingof IJV managementlags behind the demandsof practice.
Although a wide variety of control mechanisms have been identified,
managershavereceivedminimalguidanceaboutwhenandhow to use them,
as well as aboutthe potentialtradeoffsbetweenalternativecontroloptions.
As a result,manyfirmshavechosento bypassthe IJVoptionor haveentered
ventures ill-prepared.These firms may not only be missing potentially
valuableopportunities,they may ultimatelybe eliminatingthemselvesas
viablecontenderswithinentireindustries.This concernis particularlycrit-
ical whenit affectsparticipationwithinhighly competitiveglobal (or glob-
alizing) industries.
In addressingcontrolof IJVs,this paperhas attemptedto bringinto focus
a criticalvariableinfluencingventuredevelopmentand performance,and
to providea base for improvedunderstandingand managementof IJVs.
Reviewof the literatureleaves no doubt that control is a crucial organ-
izational process, for IJVs as well as for any other organizationalform.
It is also a complexand multidimensionalconcept. This featuremay help
explain why researchershave used differentapproachesto study control
in IJVs.These differences,as shownin this paper,are particularlyevident
in the conceptualizationand operationalization of control.In addition,due
to variationsamong, and weaknessesof, prior measuresof IJV perform-
ance, manyconclusionsfrom these previousstudieshaveto be interpreted
with some degreeof caution. Furthermore,the empiricalcomponent of
many studiesis not without its shortcomings.Methodologicalissues such
INTERNATIONALJOINT VENTURES 251
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