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Executive preferences for governance modes and exchange partners: An information economics perspective


Correspondence to: Jeffrey J. Reuer, Krannert School of Management, Purdue University, West Lafayette, IN 47907-2056, U.S.A. E-mail:


This study investigates how executives address information asymmetry and adverse selection surrounding international joint ventures (IJVs) and acquisitions. We argue that executives can address such exchange hazards not only through their governance decisions, as prior research indicates, but also through their selection of exchange partners. Our experimental design complements prior research on firms' governance choices in three ways: (1) by incorporating multiple potential exchange partners rather than taking a single partner as given for a realized transaction; (2) by accommodating multiple potential entry modes to address interdependencies across governance structures; and (3) by providing direct evidence on executives' assessments of IJVs and acquisitions. We join together organizational governance research and decision-making research on IJV partner selection, two literatures that have largely developed separately. Copyright © 2013 John Wiley & Sons, Ltd.