Enforcement and performance: The role of ownership, legalism and trust in international joint ventures

Xiaohua Lin and Cheng Lu Wang

Journal of World Business, 2008, vol. 43, issue 3, 340-351

Abstract: This study integrates international joint venture (IJV) literature on ownership, trust, and legalism and examines their effects as enforcement mechanisms on IJV satisfaction. The hypotheses are tested across three samples of managers - Chinese, Western, and Asian - in China-based IJVs. Results showed that relationship among ownership, trust, legalism, and IJV performance varies across cultures. Specifically, equal ownership is positively associated with IJV satisfaction for Chinese partners but majority equity leads to less IJV satisfaction for Asian IJV partners. Trust is found to be positively associated with IJV satisfaction across all three samples. However, only for Western partners, legalism has a significant impact on satisfaction and moderates the effect of trust. Conceptual contributions, managerial implications, and limitations are discussed based on these results.

Date: 2008
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