Unintended change of ownership structure and acquisition of IJVs: the effect of initial structural conditions
ISSN: 1525-383X
Article publication date: 24 March 2023
Issue publication date: 12 June 2023
Abstract
Purpose
The purpose of this study is to demonstrate the effect of initial international joint ventures (IJV) structural conditions on two main equity-based instability facets: change of IJV ownership structure and acquisition of the IJV by one of the IJV partners. Drawing on the transaction cost theory, the authors examine three key initial structural conditions: IJV formation mode, number of partners and IJV’s ownership structure.
Design/methodology/approach
The authors apply the “Event history analysis” technique to test the hypotheses using a data set of 140 French-foreign JVs.
Findings
The findings show that the mode of an acquisitive IJV and unequal equity positions held by partners increase the likelihood of a change of IJV’s ownership structure and its eventual acquisition by one of the partners. In addition, the findings show that while an increase in the number of IJV partners is directly related to the change of IJV ownership structure, it has a statistically insignificant effect on IJV acquisition.
Originality/value
Drawing on “transaction costs” arguments, this study advances the literature by offering fine-grained results related to the effects of initial structural conditions on aspects of unintended instability in French-foreign JVs.
Keywords
Acknowledgements
The authors thank Jean-François Hennart, Louis Hébert, anonymous reviewers and discussants of the 44th European International Business Academy (EIBA) 2018 conference as well as at the Academy of International Business 2020 Online Meeting, where this work was presented, for their helpful comments. The authors are also grateful for the editor and the anonymous reviewers of Multinational Business Review for their insightful comments. The authors would also like to thank the French Ministry of Foreign Affairs (Ministry for Europe and Foreign Affairs, now) and the Algerian Ministry of Higher Education and Scientific Research for their research funding.
Citation
Aib, H., Liouville, J. and Merchant, H. (2023), "Unintended change of ownership structure and acquisition of IJVs: the effect of initial structural conditions", Multinational Business Review, Vol. 31 No. 2, pp. 176-196. https://doi.org/10.1108/MBR-06-2022-0086
Publisher
:Emerald Publishing Limited
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