Framework of the Study

The literature on international joint ventures has tended to focus on particular aspects of the entity. For instance, Glaister and Buckley (1996) and Boateng and Glaister (2003) place emphasis on the strategic motives of IJV formation, while Killing (1983) and Beamish (1985) stress the management dominance issue. The present IJV study is aiming, however, both to fulfil the objectives laid down in Chapter 1 and also to show the importance of the various issues of the study and how they are inter-linked. Figure 3.1 offers a framework for the study. It indicates with an unbroken line those linkages (for example, strategic motives behind IJV formation) which have been examined by previous research and which this study has also investigated, and with a dotted line, possible linkages which are being investigated by the present study. The separate elements of the overall picture which it is intended to bring together and integrate include the characteristics of the activities, distribution, and trends of IJV formation in ASEAN countries, particularly Thailand; the strategic inducement for parent companies to form IJVs; host country location factors; parent companies’ contributions; and IJV performance assessment and performance determinants.

Since this study has obtained the official dataset of IJV formation in Thailand from the BOI (Thailand Board of Investment) it has been able to provide empirically a new and original understanding of the patterns, distribution, and trends of IJV formation in Thailand. This serves as a foundation for the thesis, fulfilling its first objective, namely “To ascertain the characteristics of the activities, distribution, and trends of IJV formation in Thailand”, and systematically present an overall picture of the activities and distribution of IJV formation in the Southeast Asian region. The proposed research framework of this study accordingly includes this issue in order to analyse the overall picture of IJV formation in the context of Thailand.

As mentioned earlier in Section 3.2, according to Pfeffer and Nowak (1976), joint ventures are legally and economically separate organisational entities created by two or more parent organisations which collectively invest capital and other resources to pursue certain strategic objectives, while Harrigan gives a more organic definition of a joint venture as a separate entity with two or more active firms as parents, where the emphasis is on the “child” (Harrigan 1984: 7). Further, a joint venture is regarded as an international joint venture (IJV) if at least one partner has its headquarters outside the venture’s country of operation, or if it has an important level of operation in more than one country (Geringer and Herbert, 1989). Accordingly, as shown in Figure 3.1, at least three parties have to be involved in the formation of an IJV: the foreign parent company, the local parent company, and the IJV itself. This study, like earlier research, is interested in investigating the strategic motives for establishing an IJV of both the foreign and the local parent companies and, as mentioned above, this is indicated in Figure 3.1 by an unbroken line.

As already noted, parent companies’ strategic impetus to form IJVs is viewed as one of the most important issues of IJV study. Harrigan (1984, 1988) argues that the compatible or conflicting motives of the parent companies have important implications for IJV survival and performance. Accordingly, this study takes both parent companies’ motives in forming the IJVs into the research framework, so as to explore and compare the importance of the motives of both, and to fufil the second objective of this research: to determine the strategic motives of parent companies in forming IJVs. The present research goes beyond this, however, and, as indicated in Figure 3.1 by a dotted line, attempts to

answer the question of whether IJV performance does in fact vary with the strategic motives for IJV formation.

The host location factor (affecting the location choice of MNEs when forming an IJV) is another important issue in this study. As discussed in the previous section, firms utilise complex modes of inter-organisational collaboration (IJVs) in an attempt to increase competitiveness and maximise profits. Hence, it is important to concentrate on this, and host location factors have also been taken into the framework of this study in order to examine the relative importance of each location factor in inducing MNEs to form IJVs in the ASEAN region, particularly Thailand. Further, this will answer another research question of this study: which host country location factors influence the decision of foreign firms to invest in Thailand?

Especially in the initial stages of an IJV, the “child” needs to have resources contributed by both parents. As already noted, according to Lorange and Roos (1992), an IJV must “receive energy” on an ongoing basis from its parents if it is to be able to grow from dependence into fully viable adulthood. The next section will detail a number of contributions which parent companies make and which have been identified in the literature. While, however, the literature contains a number of studies of aspects of parent firms’ contributions to IJVs (for example, Blodgett, 1991b; Kamminga and Van Der Meer- Kooistra, 2006), there are few studies into the effect of the parent companies’ contributions on the characteristic operation of IJVs, especially in the ASEAN4 context. Examining the contributions of parent companies to IJVs and analysing the relationship between those contributions and the characteristics of IJV operation in the context of Thailand as a Southeast Asian country is accordingly undertaken in order to fulfil the third objective of this study. What is of interest is not only establishing the contributions which parent companies make, but, again as indicated in Figure 3.1 by a dotted line, discovering what impact their contributions have on the operating of the IJV. This is in order to provide new insight into IJV operation in the ASEAN context, and to establish a linkage between the characteristics of IJV operation and performance.

Last but not least, there has been growing interest among researchers over the past three decades in IJV performance assessment and determinants3 _{(Beamish, 1988; Dymsza,}

1988; Fey, 1995; Lassserre, 1999; Sim and Ali, 2000; Luo et al, 2001; Yan and Gray, 2001; Luo, 2002). However, to date the literature indicates that there is no consensus among IJV researchers over an appropriate measure for evaluating IJV performance (Geringer and Hebert, 1991; Boateng and Glaister, 2002). There is also no agreement about IJV performance determinants, an area which remains chaotic and largely ambiguous (Robson et al, 2002). Previous studies often define, operationalise, and categorise IJV performance determinants in different, and sometimes contradictory, ways.

To overcome the limitations of these individual approaches, this research framework has adopted an eclectic approach to the measurement of IJV performance in Thailand. It includes both objective measurement (assessment of stability, duration, and survival), subjective measurement (a general assessment of the degree of perceived satisfaction), and composite measurement (multi-perceptual assessment of numerous aspects). The integration of these performance assessment approaches into this research framework will enable the present researcher to get a wider and clearer view of IJV performance evaluation in the Southeast Asian context of Thailand. Furthermore, as previously discussed, since this study is underpinned by strategic behaviour theory, background and antecedent factors have been studied to determine their influence on IJV performance, particularly in the ASEAN4 country context especially Thailand. Taken together, these approaches will fulfil the fourth and fifth objectives of this study: “To assess IJV performance in the context of the ASEAN4 countries, particularly Thailand”; and “To analyse the determinants which influence IJV performance in Thailand as a developing country”.

3

Examination of the international business literature reveals that IJV performance assessment and determinants have received focal empirical attention. These studies have been stimulated by two major trends. First, the proliferation of IJVs as critical elements in an organisation’s business network and as strategic weapons for competing within core markets (Harrigan, 1986). Second, there is substantial evidence reporting unsatisfactory IJV performance (e.g., Beamish, 1993; Hill and Hellriegel, 1994); in fact, Beamish and Delios (1997) reveal that an average of two in five IJVs are perpetual strugglers or outright failures. Thus, understanding IJV performance dynamics is vitally important to managers interested in developing and maintaining this type of cultural strategic partnership, in addition to the academic study of this subject.

3. Factors influencing the