Accounting, Organizations and Society 25 (2000) 579±607
Control of international joint ventures
Tom L.C.M. Groota, Kenneth A. Merchantb,*
Department of Accounting, Faculty of Economics and Econometrics, Vrije Universiteit (Free University), Amsterdam, The Netherlands b Leventhal School of Accounting, University of Southern California, Los Angeles, USA
Abstract Prior research has found that many international joint ventures (IJVs) fail. Some authors have suggested that control problems are one of the primary causes of IJV failures. However, little IJV-related research has focused on control issues. This paper reports the results of a largely exploratory study of the control practices employed by partners involved in three arguably successful IJVs. The study found some control-system similarities among the three IJVs, but it also found signi®cant dierences related to the use of dispute-settling mechanisms, control focus (broad vs. narrow), and control tightness. The paper describes some of the factors that seem to cause the dierences and, thus, provides a start for a contingency theory of IJV control systems. # 2000 Elsevier Science Ltd. All rights reserved.
As markets have become more globalized and competitive, it has become increasingly dicult for any single company to excel, and thus be competitive, in all aspects of a given business. Few companies have all the requisite expertise and specialized knowledge in-house. To compete, many companies have solicited the assistance of other ®rms. Many ®rms have ``outsourced'' some non-core activities, such as computer operations, training, employee bene®ts, or internal audit. And many ®rms have chosen to enter into shared, cooperative agreements with ``partner'' ®rms. Joint ventures, which are sometimes called ``equity joint ventures,''1 are one prominent form
* Corresponding author. 1 The cooperation can also be achieved by other means than equity JVs. A wide variety of...