Research Notes and Commentaries
Effect of equity ownership on the survival of international joint ventures
Version of Record online: 4 NOV 2003
Copyright © 2003 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 25, Issue 3, pages 295–305, March 2004
How to Cite
Dhanaraj, C. and Beamish, P. W. (2004), Effect of equity ownership on the survival of international joint ventures. Strat. Mgmt. J., 25: 295–305. doi: 10.1002/smj.372
- Issue online: 19 JAN 2004
- Version of Record online: 4 NOV 2003
- Manuscript Accepted: 11 AUG 2003
- Manuscript Received: 28 FEB 2002
- international joint ventures;
- equity ownership;
This note extends transaction cost analysis of international joint ventures (IJVs) to include explicitly the effect of equity. It challenges the common practice of treating all foreign investments with between 5 percent and 95 percent equity as IJVs. A fine-grained analysis of the role of foreign equity ownership on the survival of 12,984 overseas subsidiaries confirms a declining, nonlinear, and asymmetrical relationship between equity and mortality in overseas subsidiaries. While investments involving small ownership levels (<20%) have very high mortality rates, those with high ownership levels (>80%) have mortality rates comparable to that of wholly owned subsidiaries. Implications for research, practice, and policy are discussed. Copyright © 2003 John Wiley & Sons, Ltd.