advantage of the partner’s distribution channels increase productivity through economies of scales (Cleeve, 1997; Harrigan, 1986).
Secondly, joint ventures are able to increase the partners’ competitive strengths, by enhancing their position within the market. By combining the resources of the partners, the new venture can gain a more powerful position even in new markets, and access new customers rapidly. Owing to powerful parent organizations, joint ventures may have an easier way to defend their position in the market, and facilitate maintaining their competitive advantage (Harrigan, 1986).
Lastly, there are strategy considerations that give support for joint ventures. Joint ventures enabled diversification in terms of skills, markets …show more content…
Researchers agree that joint venture’s most significant problems arise from within the corporation rather than due to external causes (Geringer & Hebert, 1989; Killing, 1983). The parent companies share control over the venture’s operations, and in case their goals are not identical it can seriously prolong and encumber important decisions and processes. Insufficient control may lead to a lack of effective coordination of the venture’s activities which could stop the companies from utilizing the aforementioned benefits (Geringer & Hebert, 1989). In a study of international joint ventures Killing (1983) identified three types of ownership over joint ventures. Dominant ownership refers to organizations where one partner assumes the power, whereas the other mostly maintains a passive role. In a shared management structure both parties assumed responsibilities regarding management roles. Lastly, in independent structures both parents had an insignificant involvement in managerial duties. It was found that joint ventures where one dominant parent gives the majority of the management team are often able to outperform those, where management duties are shared among the parents, however, most successful were found to be the independent …show more content…
There is no unified way to assess the degree of internationalization, the best method depends on the purpose of the study, and the aspects the researchers wish to examine. The most wide-spread way is calculating the ratio of foreign sales to the total sales (Daniels & Bracker, 1989; Sullivan, 1994), however, in the past decades several attempts were made to create a more comprehensive model.
One of the first studies to attempt to find a way to measure and quantify the degree of internationalization was conducted by Sullivan (1994). In the research it was posited that DOI depended on three elements, namely “performance” referring to the company’s overseas activities, “structure” referring to the assets that are being used overseas, and “attitude”, referring to the executives’ orientation towards foreign operations (Sullivan, 1994, p. 331). Conducting the study on 74 multinational companies, five variables were identified to construct the Degree of Internationalization Scale (DOIINTS). The variables identified were as follows: foreign sales as a percentage of total sales (FSTS), foreign assets as a percentage of total assets (FATA), overseas subsidiaries as a percentage of total subsidiaries (OSTS), top managers' international experience (TMIE) and psychic dispersion
Secondly, joint ventures are able to increase the partners’ competitive strengths, by enhancing their position within the market. By combining the resources of the partners, the new venture can gain a more powerful position even in new markets, and access new customers rapidly. Owing to powerful parent organizations, joint ventures may have an easier way to defend their position in the market, and facilitate maintaining their competitive advantage (Harrigan, 1986).
Lastly, there are strategy considerations that give support for joint ventures. Joint ventures enabled diversification in terms of skills, markets …show more content…
Researchers agree that joint venture’s most significant problems arise from within the corporation rather than due to external causes (Geringer & Hebert, 1989; Killing, 1983). The parent companies share control over the venture’s operations, and in case their goals are not identical it can seriously prolong and encumber important decisions and processes. Insufficient control may lead to a lack of effective coordination of the venture’s activities which could stop the companies from utilizing the aforementioned benefits (Geringer & Hebert, 1989). In a study of international joint ventures Killing (1983) identified three types of ownership over joint ventures. Dominant ownership refers to organizations where one partner assumes the power, whereas the other mostly maintains a passive role. In a shared management structure both parties assumed responsibilities regarding management roles. Lastly, in independent structures both parents had an insignificant involvement in managerial duties. It was found that joint ventures where one dominant parent gives the majority of the management team are often able to outperform those, where management duties are shared among the parents, however, most successful were found to be the independent …show more content…
There is no unified way to assess the degree of internationalization, the best method depends on the purpose of the study, and the aspects the researchers wish to examine. The most wide-spread way is calculating the ratio of foreign sales to the total sales (Daniels & Bracker, 1989; Sullivan, 1994), however, in the past decades several attempts were made to create a more comprehensive model.
One of the first studies to attempt to find a way to measure and quantify the degree of internationalization was conducted by Sullivan (1994). In the research it was posited that DOI depended on three elements, namely “performance” referring to the company’s overseas activities, “structure” referring to the assets that are being used overseas, and “attitude”, referring to the executives’ orientation towards foreign operations (Sullivan, 1994, p. 331). Conducting the study on 74 multinational companies, five variables were identified to construct the Degree of Internationalization Scale (DOIINTS). The variables identified were as follows: foreign sales as a percentage of total sales (FSTS), foreign assets as a percentage of total assets (FATA), overseas subsidiaries as a percentage of total subsidiaries (OSTS), top managers' international experience (TMIE) and psychic dispersion