Equity ownership and control of international joint ventures in the retail sector
Abstract:International joint ventures (JVs) are a critical entry mode for international retailers. As a result of limited research on JVs in retailing, many significant formation decisions have not been addressed. Among the most important of these decisions is the ownership structure arrangement. This study investigated the determinants of JV equity ownership with seven British multinationals. The study found that JV equity ownership is often simultaneously influenced by multiple stimuli (or determinants) within organisational, partner and host-market domains. Equal ownership in JVs is partly determined by resource gaps, experience and managerial perceptions of partner trust and commitment during negotiations. Equity is only one source of control in retailing JVs. Some retailers prefer majority equity to influence the JV's strategy/policy context and confer legal voting rights at decision-making deadlock. The same retailers do not wish to dominate the JV. Other retailers are highly sceptical of equity to exert control and influence in retail JV operations. The study concludes with managerial implications and future research directions.
Document Type: Research Article
Affiliations: Bradford Centre of International Business, School of Management, University of Bradford, Bradford, UK
Publication date: December 1, 2010