Private Control and Collective Control in International Joint Ventures

Zusammenfassung

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This study separates joint venture control into private and collective control and examines how these two distinct types of control in IJVs are influenced by dyadic relations between cross-cultural partners. Private control involves unilateral actions taken by an individual party to maximize its own interests and gain, whereas collective control involves bilateral actions taken jointly to pursue collective gain. This study demonstrates that private and collective controls are neither exogenous nor predetermined but are instead shaped by mutual relationships between partners, together with transactional needs and environmental parameters. The analysis shows that superior dyadic relations, such as resource complementarity, operational integration, objective conformity, and interparty attachment, restrain private control and associated opportunism while enhancing collective control and associated cooperation.

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Auszug

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Private Control and Collective Control in International Joint Ventures

Introduction

Control is a central concept in all strategie alliances or joint ventures, especially those operating in a cross-cultural or international setting characterized by greater uncertainty (Beamish/Banks 1987, Geringer/Hebert 1989, Parkhe 1993). Control is the process or action by which one entity influences the behavior, process, or output of another entity through the use of power, authority, and mechanisms. Previous studies on international equity joint ventures (IJVs) have rigorously explored the importance, structure, and process of parent control (e.g., Beamish/Banks 1987, Brown/Dev/Zhou 2003, Geringer/Hebert 1989, Killing 1983, Mjoen/Tallman 1997, Parkhe 1993). Parent control has been further differentiated as either equity-based (ownership) control or non-equity-based (managerial) control (Child/Faulkner 1998, Killing 1983, Schaan 1988, Yan/Gray 1994), and decomposed into scope, extent, and mechanisms of control (Geringer/Hebert 1989). These classifications have enlightened subsequent research on the structure and process of interpartner exchange and triggered scholarly enthusiasm in exploring the effects of parent control on joint venture performances or cooperation outcomes.

Research into the relationship between control and performance for IJVs has been controversial, as evidenced by the inconsistent results (see comments by Mjoen/Tallman 1997, Steensma/Lyles 2000, Yan/Gray 1994). We argue that this inconsistency may be ascribed in part to the lack of separation of parent control into private control and collective control. Private control seeks maximum gains for an individual party (parent) at the expense of other parent(s) and the IJV itself, whereas collective control involves joint governance towards some common goals. Accordingly, private control is one-sided, exercised by each individual party with mostly non-institutionalized measures, whereas collective control is a joint governance exercised by all parties with mostly institutionalized measures. As detailed in next section, private control and collective control differ in nature (unilateral vs. bilateral), intent (self-interest vs. joint interest), scope (always specific vs. overall and specific), measure (mostly hidden tactics vs. contractual and structural measures), and visibility (mostly covert vs. always overt). This new classification scheme differs from the ownership-based parent control (majority, shared or minority) in that (1) every party has needs or interests to exert private control and collective control regardless of its ownership status, and (2) ownership can be one means to bolster a party's ability to exercise private and/or collective controls. Dismantling control into private and collective may help establish real links between control and private gains and between control and joint gains.

In our classification scheme, private control naturally has a negative impact, whereas collective control has a positive impact, on joint return creation from cooperation, though this positive impact may not be linear. An important question then arises: how should IJV partners reduce private control and enhance collective con- trol if they seek joint returns? To address this question, we focus on how the dyadic links between partner firms influence the levels of ...

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