The duration of international joint ventures an foreign wholly-owned subsidiaries

Wing-Fai Leung

Applied Economics, 1997, vol. 29, issue 10, 1255-1269

Abstract: An international joint venture is formed when the partners contribute different benefits to the venture. Each party learns from the others through the joint venture. However, the literature suggests that joint ventures are unstable. So it is hypothesized that, on average, an international joint venture will have a shorter duration than a foreign wholly-owned subsidiary. Data on US foreign direct investment (FDI) abroad and FDI in the United States are applied to test the instability of joint ventures. The proportional hazards model is applied while exponential distribution and Weibull distribution are used to cross-check the results. On the whole, the results are consistent with the hypothesis. In particular, the two types of US affiliates are significantly different in duration although the support for the hypothesis from FDI in the United States is weak.

Date: 1997
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DOI: 10.1080/00036849700000016

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