Market Entry and Expansion through International Joint Ventures

International joint ventures (IJVs) are important modes forentering foreign markets. Yet, research shows that IJVs aredifficult to manage and often fail, especially when the IJV islocated in a developing country. Many studies look at a range ofdifferent factors behind IJV success or failure, and a fewlongitudinal studies have shed light on some of the complexmanagement processes within IJVs. Many researchers have concludedthat the high rate of IJV failure is due to internal tensions thatare inherent to IJVs, but viable solutions for practitioners arerare. In the absence of a model that adequately explains thelongitudinal aspects and determinants of IJV performance, we seefirms electing to stay in underperforming IJVs, even though moreprofitable modes of entry into foreign markets exist. This workanalyzes market entry and expansion through IJVs by using amulti-causal analysis of IJV performance. It begins with a criticalevaluation of the IJV literature. It then develops aprocess-oriented model that may explain why firms persist withfailing IJVs. Finally, it draws several important conclusions thathave valuable implications for practitioners and for futureresearch.