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Purpose This study empirically examines how industrial diversification and partner business relatedness influence shareholder value, focusing on US multinational enterprises’ (MNEs) worldwide joint venture (JV) announcements, with particular emphasis on East Asian economies. Design/methodology/approach Drawing on theories from finance, strategic management and international business, we apply a standard event study methodology and employ three parametric and nonparametric tests (i.e. the Patell Z-test, the rank test and the generalized sign test) to assess the impact. We calculate abnormal returns (ARs) as the difference between actual and expected returns and average them across firms to obtain the average AR for each day in the [−10, +10] window, thereby capturing potential information leakage before JV announcement and delayed market reactions afterward (Brown and Warner, 1985; Fama, 1998). Findings We find robust evidence of a diversification premium, confirming that diversification through IJVs increases shareholder value for US partners and partnering with businesses in unrelated industries can amplify the value gains from diversification. Practical implications The findings suggest that IJVs can be a more effective entry mode than acquisitions or greenfield investments when MNEs expand into non-core business areas, offering strategic guidance for both investment mode choice and partner selection. Social implications Our findings have important implications for firms’ investment mode and partner selection decisions when they expand internationally. Originality/value To the best of our knowledge, this study is among the first to systematically investigate the combined effects of industrial diversification and partner business relatedness on shareholder value in the context of US firms undertaking IJV investments in East Asian economies.

PurposeThe purpose of this paper is to investigate the impact of two dimensions of technological relatedness, namely technological similarity and complementarity, on collaborative performance, plus the mediating role of collaboration network stickiness and the moderating role of partner expertise and geographical distance in interfirm collaboration contexts.Design/methodology/approachThis study takes Chinese Scientific and Technological Achievements (STA) of inter-firm collaboration in five high-tech fields in 2010–2020 as the sample and uses OLS regression to test the hypothesis.FindingsTechnological similarity and complementarity positively affect collaborative performance. Partner expertise negatively moderates the relationship between similarity, complementarity and collaborative performance. Geographical distance positively moderates the relationship between similarity and collaborative performance while negatively moderates that between complementarity and collaborative performance. Collaboration network stickiness partly mediates the relationship between similarity and collaborative performance.Originality/valueThis study expands literature on inter-firm collaboration, especially research on the antecedents of collaborative performance. Moreover, this study not only compensates for lack of empirical analysis in partner selection research, but also utilizes second-hand data to enhance the objectivity of analysis. Additionally, we enrich the research on the moderating role of partner expertise and geographical distance as well as the mediating role of collaboration network stickiness.

Purpose The purpose of this paper is to understand the mechanisms of partner selection from the transaction cost economics’ viewpoint. This paper reveals that a firm’s choice to initiate a new alliance with a new partner or form a repeated alliance with an existing partner depends on contract terms and the relative characteristics of partners. Design/methodology/approach The authors examine 555 alliances in high-tech industries from 2001 to 2009, which the authors collected from secondary sources, including the Securities Data Company Platinum and Compustat databases. The authors use a logit model to reveal the effect of contract terms and relative partner characteristics on repeated partnership. Findings The results show that repeated partnership is less likely to be combined with equity sharing. Repeated partnership is also negatively associated with the functional scope of a new alliance. Finally, a firm is more likely to enter a repeated partnership when its partner is from a different country. Originality/value This research provides new insights into how the choice of an alliance partner depends on contract terms and the relative characteristics of partners. Identifying factors associated with partner selection helps us understand the fundamental mechanisms of initiating a new alliance. It allows focal firms to foresee the behavior of their peers or competitors in certain circumstances and thus provides important insights for developing corresponding strategies more effectively.

Purpose – Equity contributions in joint ventures (JVs) formation are crucial and how firms decide to contribute its equity less has been explored. Based on the equity theory, the purpose of this paper is to argue that the perceived benefits-to-cost (B/C) ratio of their partners determines the level of contribution made by a focal firm. This study then argues that business relatedness, number of partners, and learning orientation in JVs are the determinants. The conditions that explain the moderating effects of business relatedness and number of partners on the likelihood of an equity contribution are also discussed. Design/methodology/approach – In total, 853 high tech industry ventures in USA spanning from 1995 to 2008 are used to test the developed hypotheses. Findings – A firm tends to employ disproportional equity contributions when their business highly related with its partners, which is similar to high number of partners dues to low B/C ratio. On the other hand, exploration JVs leads firms to employ proportional equity contributions. Further, this study shows that exploration learning positively moderates the effect of business relatedness on the likelihood of proportional equity contribution. Originality/value – This study extends the equity theory by integrating the logic of resource-based view and organizational learning into the formation of JVs.

It has been hypothesized in the international joint venture (IJV) literature that partner selection affects interpartner \"fit\" which in turn influences a synergistic effect on IJV performance. This study investigates the relationship between IJV success and the strategic and organizational traits of local partners. We address this issue in the context of an emerging economy (P.R. China). Newly emerging economies have in recent years become major hosts of direct investment by multinational corporations (MNCs) because these rapidly expanding economies, characterized by an exploding demand previously stifled by ideologically-based government intervention, provide tremendous opportunities which MNCs can preempt. MNCs in such economies, however, face the challenges of structural reform, weak market structure, poorly specified property rights, and institutional uncertainty. Right local partners can help MNCs boost market expansion, obtain insightful information, mitigate operational risks, and provide country-specific knowledge. The analysis of the data obtained from China suggests that both strategic and organizational traits of local partners are significantly associated with some individual dimensions of IJV performance. Among strategic traits, absorptive capacity, product relatedness, and market power are favorable to IJVs' market and financial outcomes. Market power and experience significantly reduce IJVs' operational uncertainties. Of organizational traits, international experience and organizational collaboration are important for IJVs' not only profitability and stability but also local market expansion and export growth. Organizational form and size influence IJVs' local market performance. The findings provided by this study can help MNCs determine what criteria they should use in opting for local partners and what criteria are vital to their goal accomplishment. Those investors seeking local market expansion should select those local partners that have rich market experience, superior market position, high absorptive capacity, and related product diversification with the IJVs. Those seeking profitability and stability should select local firms that have superior international experience, longer organizational collaboration, and greater market power. While MNCs should use appropriate strategic and organizational criteria to select local partners, the host government or local firms can try to make these traits available to attract more stable and profitable foreign direct investment.