Adoption of new technology and joint venture instability

Tarun Kabiraj () and Prabal Roy Chowdhury ()

Research in International Business and Finance, 2008, vol. 22, issue 2, pages 108-123

Abstract: We consider a joint venture between a local firm from a less developed country, and a foreign multinational. In a dynamic two period model, we demonstrate that the availability of new technology can trigger a joint venture breakdown, a result that is consistent with the empirical evidence. We find that such breakdown is more likely if the MNC is relatively patient, or, in contrast to the existing literature, there is an increase in the level of demand. Moreover, our results are robust to alternative assumptions regarding bargaining power and control.

Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:eee:riibaf:v:22:y:2008:i:2:p:108-123

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