Regarding the key factors for success or failure of an IJV two decisive clusters can be detected, namely factors in the company-internal and the company-external environment. The internal environment is characterised above all by the aspects partner attributes and partner fit, the degree of trust, as well as governance and the leadership team. The external environment is shaped by both country- and industry-specific conditions and of course also by global determinants. The interaction of these various factors and the two clusters of factors in general exerts influence on the performance of the IJV and therefore determines success or failure.
The outcome of IJVs in turn is connected with foreign direct investment and international trade flows which makes the performance important for these topics, as well. In both cases different perspectives on the particular connection can be adopted. Consequently, contrary results, either a positive or a negative correlation between on the one hand the performance of the IJVs and on the other hand foreign direct investment and international trade flows, can be achieved.
Table of Contents
1. Fundamentals of International Joint Ventures
1.1 Introduction
1.2 Definition of an (International) Joint Venture
2. Key Factors for Succes or Failure
2.1 Reasons for establishing an International Joint Venture
2.2 Key Factors
2.2.1 Internal Environment
2.2.2 External Environment
2.3 Importance of Key Factors in Comparision
2.4 Case Studies
2.4.1 Shanghai Volkswagen Automotive Company Ltd. (SVW)
2.4.2 Deer Park Refining Ltd. Partnership (DPRLP)
3. International Joint Ventures and Foreign Direct Investment
4. International Joint Ventures and international Trade Flows
5. Critical Assessment
6. Conclusion
Research Objectives and Themes
This seminar paper investigates the critical determinants of performance in International Joint Ventures (IJVs) and analyzes how these ventures influence broader economic metrics such as Foreign Direct Investment (FDI) and international trade flows.
- Theoretical definition and classification of International Joint Ventures.
- Identification of internal and external factors influencing IJV success or failure.
- Comparative analysis of IJV performance drivers through case studies (SVW and DPRLP).
- Examination of the correlation between IJV success and FDI development.
- Assessment of the substitutive vs. trade-creating effects of IJVs on international trade.
Excerpt from the Book
2.4.1 Shanghai Volkswagen Automotive Company Ltd. (SVW)
In 1984 Shanghai Volkswagen was founded as the first Sino-German-IJV by Volkswagen and the Shanghai Automotive Industry Corporation. Although there was a joint vision, namely to become the largest and most advanced factory in automotive industry in China which was a foundation for joint strategies, according to Posth (2006) enormous challenges had to be faced right from the start. The factory provided by the Chinese partner where the model “Santana” was supposed to be produced was in a miserable condition. The same poor situation applied to most of the local suppliers, as well. Access to resources in terms of technological know-how but also reporting or information systems was contributed by Volkswagen as the opening up of the Chinese market was highly attractive. But as this upgrading process was time-consuming for instance some materials and components had to be imported. But in turn this had a negative influence on a couple of key factors. Imports of the needed quantity were not in line with the local content constraints or at least not for a long time. In addition to that import duties had to be paid and oftentimes long waiting times were inevitable.
Furthermore, in spite of many visits in advance and a long period of negotiations finally collaboration was rather inert. From the perspective of Volkswagen the Chinese employees were not willing to bear responsibility which might be related to a relatively high degree of risk-aversion. Apart from this cultural dimension there was also a lack of commitment. In order to make this key factor of the internal environment more advantageous a pay programme depending on output, quality and education was implemented. And indeed production became more efficient. In 1986, two years after the foundation, the planned output was reached and in general step by step improvements has been made. With the production of the model “Satana 3000”, which was launched in 2004, SVW is still one of the players in the Chinese automotive market.
Summary of Chapters
1. Fundamentals of International Joint Ventures: This chapter defines the concept of an International Joint Venture and positions it within the context of global market entry strategies.
2. Key Factors for Succes or Failure: This section explores the reasons behind IJV formation and categorizes the key internal and external environmental factors that determine performance, illustrated by two specific case studies.
3. International Joint Ventures and Foreign Direct Investment: This chapter discusses the connection between IJV performance and Foreign Direct Investment, contrasting different theoretical views on their correlation.
4. International Joint Ventures and international Trade Flows: This part analyzes how IJVs impact international trade, exploring both the substitution effect and potential trade-creating dynamics.
5. Critical Assessment: This section reviews the limitations of current IJV research, noting inconsistencies in methodology and the lack of dynamic, long-term observational studies.
6. Conclusion: The paper synthesizes the findings, reiterating that IJV performance is a multidimensional construct that remains a complex challenge for multinational enterprises.
Keywords
International Joint Ventures, IJV, Foreign Direct Investment, FDI, Globalisation, Performance, Internal Environment, External Environment, Partner Fit, Trust, Governance, Leadership, Trade Flows, Market Entry Strategies, Cooperation
Frequently Asked Questions
What is the core subject of this seminar paper?
The paper examines why some International Joint Ventures succeed while others fail, and it investigates the significance of these ventures for Foreign Direct Investment and international trade.
What are the central thematic fields covered?
The main themes include IJV performance factors (internal and external), the relationship between joint ventures and FDI definitions, and the impact of IJVs on trade patterns.
What is the primary research objective?
The objective is to provide a structured overview of the success factors for IJVs and to analyze the multidimensional implications these ventures have on global economic flows.
Which scientific methods are used?
The paper utilizes a literature review of existing economic theories and conducts a qualitative comparative analysis based on two specific case studies: Shanghai Volkswagen and Deer Park Refining.
What is covered in the main body of the work?
The main body covers the definition of IJVs, a detailed breakdown of success factors (partner fit, trust, leadership, external environment), and a critical analysis of their relationship with FDI and trade.
How can the work be characterized by its keywords?
The work is characterized by terms such as International Joint Ventures, FDI, performance, partner fit, trust, and global market entry strategies.
Why is the "internal environment" considered vital for IJV success?
The internal environment is critical because it involves factors like partner fit, trust, and governance, which are essential for managing the collaborative nature of a joint venture and overcoming potential cultural or operational friction.
How do IJVs influence international trade flows according to the author?
The author presents two perspectives: one where IJVs substitute trade through local production, and another where they create additional trade through the transfer of resources and knowledge between parent companies and affiliates.
- Arbeit zitieren
- Isabella Aberle (Autor:in), 2008, Why are some International Joint Ventures a Success whereas others are a Failure?, München, GRIN Verlag, https://www.grin.com/document/142226
