Keeping international joint ventures stable and profitable

Abstract

If international joint ventures are inherently unstable organizational forms, as researchers and managers have suggested, why do some ventures survive and prosper for many years? This article argues that foreign partners' knowledge of the local economic, political, and cultural environments is a critical factor in the stability of international joint ventures. When the foreign partner is no longer satisfied with access to local knowledge and seeks to acquire this knowledge, the probability of joint venture instability increases substantially. This article suggests that if managers are aware of the factors influencing joint venture stability, they may be able to prevent or control premature changes in partner relationships.