The Drivers of the Dissolution of Interfirm Partnerships by Emerging Market Multinationals: An Abstract

An international interfirm partnership is a formalized arrangement between two or more firms from different countries focusing on various value chain activities including but not limited to product development, manufacturing, and technology (Pedada et al. 2019). In terms of its organizational structure, it can either take the form of a distinct corporate entity or an interorganizational entity (Varadarajan and Cunningham 1995). International interfirm partnerships have become ubiquitous as they help firms reach economies of scale, hedge risks, learn new skills and technologies, and facilitate effective resource sharing (e.g., Beamish and Berdrow 2003; Beamish and Inkpen 1995; Julian and O’Cass 2004).

Despite their popularity and benefits, international interfirm partnerships are inherently risky, and most of them dissolve shortly after their inception (Cui 2013; Tower et al. 2019). Previous studies have investigated a variety of factors that affect the dissolution of these partnerships in various environmental and organizational contexts such as equity structure (Dhanaraj and Beamish 2004), resource dependence (Xia 2011), cultural differences (Talay and Akdeniz 2009), and lack of cooperation (Luo and Park 2004) between partners. While extant literature provides valuable insights, our knowledge of the drivers of the dissolution of interfirm partnerships by emerging-market multinational enterprises (EMNEs) is rather limited. Yet, one of the most significant developments in international business has been understanding the role of emerging markets in international business as well as the rise of EMNEs and their contributions to globalization (Buckley and Tian 2017; Griffith et al. 2008). This study is based on the premise that EMNEs in general, and their international partnerships in particular, deserve scholarly attention because EMNEs are different from multinational enterprises from developed countries (DMNEs) with respect to the amount and type of resources they afford in an international partnership (Pedada et al. 2019).

With a focus on international joint ventures (IJVs) as a type of interfirm partnerships, this study develops a typology based on home- and host-countries as either a developed or emerging market, and hence, examines how the country-of-origin of the IJV partners’ home countries and the IJV host country affect the likelihood of dissolution. In addition, we compare how the effects of these drivers vary compared to IJVs founded with DMNEs. Using a large dataset of IJVs spanning almost 20 years and more than 100 countries, our analyses reveal that along with some partner-firm and host-country related factors, IJV partners’ home countries and the IJV host country affect IJV dissolution likelihood.