Are joint venture partners more opportunistic in a more volatile environment?
Article first published online: 29 NOV 2006
Copyright © 2007 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 28, Issue 1, pages 39–60, January 2007
How to Cite
Luo, Y. (2007), Are joint venture partners more opportunistic in a more volatile environment?. Strat. Mgmt. J., 28: 39–60. doi: 10.1002/smj.564
- Issue published online: 29 NOV 2006
- Article first published online: 29 NOV 2006
- joint venture
This study examines how joint venture partners' opportunism is influenced by environmental volatility in a drastically changing emerging economy. Building on transaction cost and information-processing theories, we develop the hypothesis that opportunism increases to cope with industry structural instability, information unverifiability, and law unenforceability, the three interrelated yet distinct characteristics that jointly describe environmental volatility in an emerging economy. Our analysis of 188 foreign joint ventures in an emerging market suggests that opportunism increases with information unverifiability and law unenforceability. These relationships are even stronger when joint ventures depend more on the host country environment, but weaker when joint ventures operate in faster-growing industries. Finally, opportunism is found to play a mediating role in the relationship between environmental volatility and joint venture performance. Copyright © 2007 John Wiley & Sons, Ltd.