SIZE OF THE PIE AND SHARE OF THE PIE: IMPLICATIONS OF NETWORK EMBEDDEDNESS AND BUSINESS RELATEDNESS FOR VALUE CREATION AND VALUE APPROPRIATION IN JOINT VENTURES

Abstract

This chapter examines the factors that may influence the total value created in a joint venture (JV) and also the relative value appropriated by each partner in the venture. We look at the effects of both partners’ embeddedness in prior networks of relationships and the asymmetry of business relatedness of two partners with the JV on these two important outcomes. Results of an event study of stock market reaction to JV announcements by the largest U.S. firms during 1987–1996 suggest that both network embeddedness of partners and the asymmetry of business relatedness of two firms with the JV affect the total value creation of all partners but not the relative value appropriation between the partners.

Citation

Gulati, R. and Olivia Wang, L. (2003), "SIZE OF THE PIE AND SHARE OF THE PIE: IMPLICATIONS OF NETWORK EMBEDDEDNESS AND BUSINESS RELATEDNESS FOR VALUE CREATION AND VALUE APPROPRIATION IN JOINT VENTURES", Buskens, V., Raub, W. and Snijders, C. (Ed.) The Governance of Relations in Markets and Organizations (Research in the Sociology of Organizations, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 209-242. https://doi.org/10.1016/S0733-558X(02)20008-7