Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes

Tailan Chi and Donald J McGuire
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Tailan Chi: University of Wisconsin-Milwaukee
Donald J McGuire: University of Wisconsin-Milwaukee

Journal of International Business Studies, 1996, vol. 27, issue 2, 285-307

Abstract: This paper employs a simple stochastic model to investigate how transaction cost and strategic option considerations interact to influence a firm's evaluation of collaborative venturing as a market entry mode. After demonstrating how uncertainty about the market and about the potential partner can add to the value of a collaborative venture, the paper explicates a condition under which the option to acquire or sell out generates a positive economic value for both of the partners. The interaction of transaction cost and strategic option considerations is then examined, and a number of testable hypotheses are proposed based on the theoretical analyses of the paper.© 1996 JIBS. Journal of International Business Studies (1996) 27, 285–307

Date: 1996
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