Research Summary
Research Summary
Creating Trust in International Joint Ventures in Asia: An Empirical Comparative Study
Description
In the wake of the currently ongoing financial crisis in Asia, we anticipate a rapid increase of international joint ventures between Asian and Western firms. However, so far, the sources of success in international joint ventures have not been well understood. Why do some joint ventures between Asian and Western partners work well, while others face difficulties? What can we do to make them work better? These are the sort of questions we would like to explore in this research project. We are particularly interested in understanding how the type and level of 'trust' between multinationals and local partners affect the performance of international joint ventures. We have developed a multidimensional definition and operationalization of 'trust' and have designed a measurement instrument. Drawing from transaction costs analysis and sociology we have formulated a set of hypotheses linking the economic, social and cultural determinants of 'trust' to performance measures. We have launched a large-scale data collection in Asian countries. The statistical data analysis will test these theoretical hypotheses and help develop a practical guide for how to make international joint ventures work better. In particular, we seek to identify best practices in joint venture management and locate their origins and mechanisms. For example, are Japanese multinationals doing better or worse than their Western counterparts, and what can we learn from this? Are chemical companies better at creating trust than automobile companies? Is best practice in China or India different from best practice in Malaysia or Vietnam? Are there differences in the perception of trust between the Western and Asian members of the same joint venture and why? What kinds of behaviors, attitudes or incentive structures can firms implement to create and increase trust within a joint venture?