Parents' Management Control Over Joint Venture Companies In International Infrastructure Investment:Antecedents And Boundaries

In the field of international infrastructure investment,the entry mode of international joint venture(IJV)has been extensively adopted by international construction companies because of its various advantages.As a governance instrument that could motivate the other party to achieve predetermined outcomes,parent firms'(parents')management control is widely used in IJV governance.In order to implement appropriate management control over IJVs,it is necessary for parents to know more about the antecedents and boundaries of management control.Although parents'management control over IJVs has received attention in general management,the existing research still cannot clearly explain parents'management control in international infrastructure investment.Based on the transaction cost theory,this paper investigates how parents in international infrastructure investment arrange management control over IJVs from the perspective of risk governance.In responding to this research question,this paper first examines the main effects of goal incongruence between IJV partners and task interdependence between the parent and the IJV.On this basis,this paper studies the moderating roles of goodwill trust between IJV partners and environmental uncertainty of the IJV,respectively.Finally,this paper further explores the configurational effects of various conditions.A questionnaire survey was conducted on Chinese parents that had set up IJVs for international infrastructure investment.Through hierarchical regression analysis and fuzzy set qualitative comparative analysis,this research finds that:(1)there exists an inverted U-shaped relationship between goal incongruence and behavior control,and the peak investment will occur earlier when goodwill trust is high;(2)as for outcome control and social control,the effects of goal incongruence on both these two control types follow the inverted-U shape when goodwill trust is low and turn negative when goodwill trust is high;(3)task interdependence is positively related to behavior control and social control;(4)as environmental uncertainty increases,the positive relationship between task interdependence and behavior control will first strengthen,and then weaken,while the positive relationship between task interdependence and social control will directly weaken;(5)parents' high level of management control is mainly to deal with the high level of operational risk and high level of relational risk that exist simultaneously or separately,and also to make up for the IJVs' insufficient ability;and(6)only under certain conditions or combinations of conditions will a high level of transaction risk stimulates a high level of parents'management control,and in the face of the same high level of transaction risk,the conditions or combinations of conditions for parents to implement different types of high-level control are not exactly the same.In the context of international infrastructure investment,this paper clarifies the impact of goal incongruence and task interdependence on parents'management control as well as their boundaries,identifies the causal configurations that stimulates parents'high level of management control,and reveals the boundaries within which a high level of transaction risk stimulates a high level of parents' management control.The conclusions of this paper broaden the research on the antecedents of parents'management control and deepen the cognition of situational dependence of parents'control.In addition,this research also offers managerial implications for managers in international infrastructure investment regarding how to implement effective management control over IJVs against specific risks in different situations.