Empirical Research On Influencing Factors Of Cooperative Dilemma Of Joint Ventures

As one of the major organization forms of strategic alliance, joint venture is a contractual arrangement that forms a separate entity to gain competitive advantage in the marketplace. Although joint venture has become a better organization form among others, it is determined that the operation of joint ventures is far from satisfactory. It is reported that joint ventures failed eventually due to some unfavorable factors such as partners' opportunistic behavior and lack of cooperation that are likely to threaten effective operation of joint ventures. The self-interest rational choice of joint venture partners will lead to long-term failure of joint venture, resulting in cooperative dilemma. It is believed that managing joint ventures is much more complicated than management of general enterprises. Therefore, it is important for researchers and practitioners if they can explore the influencing factors of cooperative dilemma of joint ventures and take advantage of these factors to improve mutual cooperation and decrease partner opportunism. At the same time, governance mechanism is put forward to settle cooperation dilemma in Chinese society.On the basis of relevant literature, this research discusses the influencing factors of cooperative dilemma of joint ventures from three different perspectives.Firstly, this paper makes a comprehensive explanation to the cause and mechanism of the cooperative dilemma of joint ventures from the perspective of transaction cost theory and social dilemma theory. In particular, this article defines the construct of cost as a three-component conceptualization (i.e., partner selection cost, asset specificity and extorting rent cost). Based on empirical evidence on a survey of 226 manufacturing joint ventures in China, this study tests hypotheses proposed in chapter three and the findings demonstrate that all the three costs are positively related to cooperation among joint venture partners. Particularly, specific asset investment exerts the most significant influence on joint venture partner's cooperation. The results also reveal that opportunistic behavior is significantly affected by extorting rent cost. The findings show that conducting sufficient partner selection and increasing extorting rent cost increase the probability of specific asset investment.Secondly, this article provides an integrated framework for examining the effects of trust (competence trust, goodwill trust) and cooperation on partner opportunism, and for exploring the moderating effects of guanxi on the relationships among trust, cooperation, and opportunism in joint ventures. Using data collected from 354 manufacturing joint ventures in China to test hypotheses proposed in chapter four, the results indicate that both competence trust and goodwill trust reduce the likelihood of opportunism in a joint venture through fostering cooperation with partners. Competence trust also exerts significant influence on preventing opportunism, whereas opportunistic behavior is not greatly affected by goodwill trust. Additionally, the results reveal that guanxi helps strengthen the negative relationship between cooperation and opportunism.Thirdly, based on the social dilemma theory, transaction cost theory and relational exchange theory, this paper explores how the guanxi between executives in joint venture as moderator variable to affect the relationship between two kinds of governance mechanism (contract governance and relational governance) and joint venture partner's cooperation, and the relationship between two kinds of governance mechanism and opportunistic behavior. It puts forward that corresponding governance mechanisms should be adopted in different situation in order to resolve the issue of cooperative dilemma of joint ventures. Using data collected from 377 respondents with sufficient joint venture management experience to tests hypotheses presented in chapter five, this research investigates how high and low guanxi affect the implementation of governance and the validation of each governance in resolving cooperative dilemma. The findings suggest that the effect of contractual and relational governance mechanisms on joint venture partners' behavior depends on the degree of guanxi that partners share. Specifically, only in low guanxi scenario, contractual and relational mechanisms complement each other to effectively enhance cooperation between partners, and simultaneously prevent opportunism; whereas relational mechanism takes the place of contractual mechanism to play an effective role in high guanxi scenario.Finally, this research summarizes the findings. According to theoretical contributions and practical implications, it offers suggestions for settling cooperative dilemma of joint ventures in emerging economy.