| The purpose of this study was to examine how parent firms exercise control over international joint ventures (IJVs). Using an integrative approach, I developed a general framework of parent control in IJVs, which includes output control, process control, and social control, exercised by both foreign and local parent firms. The theoretical framework was examined using original survey data on 259 IJVs in China. Empirical findings suggested that parent firms modify their control activities to accommodate different internal and external conditions. Specifically, foreign companies tend to rely on output monitoring and social regulation to ensure financial returns, and on process surveillance to explore new opportunities, while Chinese partners tend to utilize process control for knowledge learning. Both parent firms' equity contribution and general competence help them perform all types of control, but only unexpected contributions of intangible resources (i.e., relationship-based contribution by foreign parent firms, knowledge-based contribution by Chinese parent firms) can enhance their respective process and social control. In response to goal incongruence with untrustworthy partners, foreign parent firms tend to seek all types of control, but Chinese parent firms mainly stress on social control. To influence IJVs of high importance and those strongly relying on parent support, both parent firms tend to apply output or process control rather than social control. In addition, IJV life stage, market situation, and China's ownership system have certain impacts on parent firms' control activities. The research results also showed that the three types of parent control are related with IJV performance in different ways. Output control is not always beneficial given that foreign and Chinese parent firms have dissimilar outcome preferences. Non-positive relationships between process control and IJV performance suggest that IJVs need to have adequate operational autonomy. And social control is largely positively associated with IJV performance. Overall, this study indicated the distinctive features of each type of parent control and provided important implications for the design and implementation of parent control systems in IJVs. |
