Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms

Abstract

We examine international joint ventures in the telecommunications industry in

Applications virtual special issue: Practical advice on how to unlock value from your alliances

“…Significant resource asymmetries must exist between partners for a real option to have strategic value (Chi, (Mitsuhashi and Greve 2009) Forming relationships with incompatible partners can destroy value in alliances (or allow opportunistic partners to appropriate value for themselves) (Perkins et al 2014). This is especially true if this is your first alliance with an incompatible partner.…”

“…The lack of partners' compatibility can be especially dangerous in the context of international joint ventures. Perkins et al (2014) show a high risk of failure in joint ventures between Brazilian companies that belong to business groups exhibiting the pyramid ownership structures and foreign partners that don't belong to such business groups. This effect was exacerbated by the fact that many foreign companies entered such joint ventures with Brazilian partners for the first time and they did not have any prior experiences in dealing with members of pyramidal business groups.…”

Structuring and Governing Alliances: New Directions for Research

“…The fourth article in this special issue-Innocents abroad: the hazards of international joint ventures with pyramidal group firms (Perkins, Morck, and Yeung, 2014, this issue)-examines international joint ventures in Brazil and provides a detailed analysis of how the governance of pyramidal firms can imperil collaborative agreements. Like other studies in this issue, this research provides an example of how institutional factors play an important role in the structuring, management, and governance of collaborative agreements.…”

The Institutional Ownership and Firm Performance: Evidence from The Capital Bank

“…Comparative analysis reveals that ownership concentration may be associated with the control leverage provided by the use of pyramidal structures (Zattoni, 1999) and dual class shares (Harris & Raviv, 1988), adopted separately or jointly (Barontini & Caprio, 2006). Pyramids consist of multiple layers of ownership relationships characterised by mutual cross-shareholdings (Patel et al, 2002;Perkins et al, 2014). Pyramidal structures are formed by a number of companies linked with capital ties, strengthened by interlocking directorates and tied with financial and investment policies which constitute relations of control (Zattoni, 1999).…”