Firm heterogeneity and the integration trilemma: The utility of Joint ventures in integration versus outsourcing models

Charlie Joyez ()
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Charlie Joyez: Université Paris-Dauphine, PSL Research University,IRD, LEDa, DIAL

No DT/2017/09, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: The traditional Grossman-Hart-Moore (GHM) property right theory of the ?rm does not consider shared ownership as an optimal solution because of the incentive loss it would be responsible for. This paper examines the rationale for speci?c cases of shared ownership: International Joint Ventures (JVs), with heterogeneous ?rms in various host-countries. Speci?cally, we built a theoretical model that extends the Antr`as & Helpman (2008) integration dilemma under partially incomplete contracts to international joint-ventures. These turn to be the optimal ownership structure in two different cases. Speci?cally, for medium-productive ?rms when the most productive would opt for full integration. More interestingly JVs turns to be the optimal ownership choice, even for most productive ?rms in countries with lower quality of contractual institutions. The model insists then on the interaction between ?rm-level and country-level parameters, with higher productivity giving increasing access to higher ownership share in countries with stronger contractual enforceability.

Keywords: Property Right Theory; Asset Ownership; Shared Ownership; International Joint Ventures. (search for similar items in EconPapers)
JEL-codes: D23 L24 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2017-10
New Economics Papers: this item is included in nep-cta and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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