European Business Schools Librarian's Group

Working Papers,
Copenhagen Business School, Department of International Economics and Management

No 4-2002: WHY DO INTERNATIONAL JOINT VENTURES FAIL? A STRATEGIC MISMATCH EXPLANATION

Bo Bernhard Nielsen
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Bo Bernhard Nielsen: Department of International Economics and Management, Copenhagen Business School, Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, 2nd floor , DK-2200 Copenhagen N, Denmark

Abstract: Why do so many international joint ventures fail? This paper aims at answering this question and contribute to the research concerning alliance dynamics by combining ele-ments from research considering alliance formation and alliance outcomes. This paper draws on the widely accepted exploitation/exploration dichotomy, suggesting the exis-tence of a continuum of choices related to strategic motivation for alliance formation. However, by integrating the exploitation/exploration arguments into a set of knowledge-related strategic motives for IJV formation, the main arguments focus on the relationship between initial strategic motivation for alliance formation and outcome in terms of knowledge. Essentially, it is argued that IJVs fail due to mismatches between strategic motives and rationales among the partners. Ultimately, a series of testable propositions are derived to guide future empirical investigation. Finally, the paper provides sugges-tions for future theoretical development and empirical exploration.

Keywords: International Joint Ventures; Knowledge Management; Strategic Mismatch; Exploration/Exploitation

31 pages, July 1, 2002

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