Factores humanos

3.4.1 Growth and Trends of IJV Formation

Since the early 1960s many researchers have commented on the growing popularity of IJV formation as a strategic mode of overseas market entry, especially among MNEs (Beamish 1985; Hergert and Morris, 1988; Madhok, 1995; Makino and Beamish, 1998; Julian, 2004). With significant fluctuations, the annual proportion of IJVs in new manufacturing subsidiaries grew from about 10 percent in the 1910s to over 50 percent in the early 1960s. Just as striking as this rising trend was a sharp decline in IJV formation for most of the 1960s. The annual proportion of IJVs in new subsidiaries fell continuously from 55 percent in 1961 to 31 percent in 1968 (Harrigan, 1988; Gomes-Casseres, 1989).

A closer look at the post-war period reveals other surprising trends. There appear to have been two and a half cycles in MNEs’ use of IJVs at entry. From 1946 to 1951, the annual proportion of IJVs in new entries rose from 15 percent to over 50 percent; after that, it fell to 28 percent in 1955. Then came another rise to a peak of 55 percent in 1961, followed by a decline to 31 percent. A third increase began in 1969, with the share of IJVs reaching 41 percent in 1975 (Harrigan, 1988; Gomes-Casseres, 1989). Gomes-Casseres (1989) argues that one explanation for the increase in IJVs in some periods might be that foreign corporations were diversifying as they went abroad.

According to Anderson (1990), Blodgett (1991a, 1992), Gomes-Casseres (1989), Geringer and Herbert (1991), and Koot (1988), there have been more IJVs and other collaborative ventures announced since 1981 than in all the previous years combined. If in the past IJVs had been used to exploit peripheral markets or technologies, now the IJV approach is being seen as a crucial element of a business unit’s network, and as a strategic weapon for competing within a firm’s core markets and technologies (Julian, 2004).

Datta (1988) suggests that the increasing number of IJVs in the 1980s is partially attributable to changes which have taken place in the global business environment since the early 1970s. These changes include, firstly, significant erosion of the bargaining power of MNEs, especially in terms of technological know-how. As a result, many host governments insist that foreign companies form partnerships with local companies before they can be granted permission to set up operations in their countries (Ahn, 1980; Beamish, 1985, 1993; Connolly, 1984; Higginbottom, 1980; Millin, 1984).

Secondly, foreign corporations have begun to recognise that local firms can make a significant contribution to a venture through their intimate knowledge of what is often a complex and volatile local business environment (Hall, 1984; Beamish and Inkpen, 1995; Lee and Beamish, 1995; Madhok, 1995). Finally, the recent increase in overall IJV activity has probably resulted from a growing awareness among organisations in developed countries that the continuing globalisation of their market requires them to be more cost effective and efficient if they are to succeed globally (Levitt, 1983; Shanks, 1985; Jain, 1994). This, in turn, might require that operations be set up in other countries which provide cheaper raw materials and/or lower processing costs.

A number of studies (Datta, 1988; Oman, 1988; Goldenberg, 1989; Anderson, 1990; Beamish, 1993; Fey, 1995; Beamish and Delios, 1997; Makino and Beamish, 1998; Demirbag and Mirza, 2000; Indro and Richards, 2007) also indicate that the increasing use of the IJV as a market entry vehicle is likely to continue well into the twenty-first century. These researchers cite five main reasons for the rising popularity of IJVs. First, the governments of many countries, especially developing countries, still restrict foreign ownership. These restrictions play an important role in determining the establishment and structure of IJVs in developing countries. Second, many firms have found that host country partners in an IJV can help them enter new markets quickly by providing management expertise and local connections. Third, this help is particularly important because of intensifying global competition in many industries. Competitors are often willing to settle for IJVs in host countries where foreign corporations have previously insisted on wholly-owned subsidiaries. Fourth, firms from developed countries have become more attractive IJV partners as their technological capabilities and market

presence have grown. Finally, in many industries, global scale is becoming a distinct advantage in R&D and production, leading all but the largest firms to consider IJVs as a way to achieve economies of scale and share risks.

3.4.2 Activity Distribution of IJV Formation

Many previous studies (Glaister, and Buckley, 1998; Demirbag and Mirza, 2000; Marangozov, 2005; Indro and Richards, 2007) have shown that foreign firms from the ‘Triad’ countries (the EU, USA, and Japan) are the key players in IJV formation. Marangozov (2005), investigating the distribution of IJV formation in Bulgaria, found that more than 50 percent of the foreign partners come from the Triad countries, especially the EU on account of geographical proximity and political and economic relations. Likewise, Glaister and Buckley (1998) found that more than 90 percent of IJVs established in the UK result from partnership between British firms and companies from the Triad countries.

Regarding the distribution of IJV formation by industrial sector, it can be drawn on previous empirical studies by Mariti and Smiley, 1983; Reynolds, 1984; Artisien and Buckley, 1985; Ghemawat et al., 1986; Morris and Hergert, 1987; Osborn and Baughn, 1990; Auster, 1992; Shenkar and Zeira, 1992; Chung et al., 1993; Schroath et al., 1993; UNCTAD, 1994; Lyles and Salk, 1996; Hebert and Beamish, 1997; Valdes Llaneza and Garcia Canal, 1998; Glaister et al., 1998; Tatoglu, 2000; and Barba Navaretti et al., 2002. These have shown that the dominant sectors for IJV formation between companies in the Triad countries are chemicals, automobiles, and electronics. IJVs established between companies from the Triad countries and non-Triad countries focus mainly on the production of chemicals, of miscellaneous machines and equipment, of food and drink, and of textiles and clothing.

Other studies (Ahn, 1980; Higginbottom, 1980; Beamish, 1985, 1993; Cullen et al., 1995) tell us that the equity participation is most often unequally distributed between IJV partners. Furthermore, this inequality normally favours the host country partner, especially in developing countries where government legislation restricts foreign companies to minority equity participation. They are further allowed to invest only in industries which

are not considered essential to national security, and in industries where they have access to the latest technology.