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Frequency and directional reversal of equity ownership change in international joint ventures

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Abstract

Changes in equity ownership between international joint venture (IJV) partners over an IJV life-course represent an important behavioral manifestation of relational dynamics. We examine each occurrence of equity ownership change for two salient temporal properties: frequency (how often ownership change occurs) and directional reversal (when a partner buys and then sells, or vice versa, equity shares from another partner). Building on social exchange theory, we propose that initial partner equity imbalance and partners’ country’s individualism-collectivist culture has an imprinting effect on the likelihood of ownership change for both temporal properties. We developed a data set consisting of all equity changes in 200 Japanese automotive suppliers’ IJVs and found support for our hypotheses while controlling for transaction cost explanations. Our findings contribute to IJV research by shedding light on temporal aspects of equity ownership change over an IJV’s life course as well as the underlying exchange dynamics and the stability of IJV equity ownership distribution among partners.

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Acknowledgments

We thank Takehiko Isobe and two reviewers for helpful comments. Earlier version of this manuscript was presented at the Academy of Management (Montréal, Québec, Canada, August 2010). This research was supported in part by the PSC-CUNY Award (66771-00 44), jointly funded by the Professional Staff Congress and the City University of New York, and the Weissman Center International Business Research Grant. All views are those of the authors.

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  1. School of Management, State University of New York at Buffalo, 326B Jacobs Management Center, Buffalo, NY, 14260, USA

    Akie Iriyama

  2. Zicklin School of Business, Baruch College—CUNY, Vertical Campus 9-281, One Bernard Baruch Way, New York, NY, 10010, USA

    Weilei (Stone) Shi

  3. University of Pittsburgh, 246 Mervis Hall, Pittsburgh, PA, 15260, USA

    John E. Prescott

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  1. Akie Iriyama
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Iriyama, A., Shi, W.(. & Prescott, J.E. Frequency and directional reversal of equity ownership change in international joint ventures. Asia Pac J Manag 31, 215–243 (2014). https://doi.org/10.1007/s10490-013-9344-x

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