What makes a joint venture: Micro‐evidence from Sino‐Italian contracts

Abstract

This paper provides new contract-level evidence on control rights allocation in order to define what makes a joint venture. Property rights theory of the firm identifies circumstances under which joint control alleviates investment distortions due to contract incompleteness. We compare predictions of the theoretical literature with actual governance structures of Sino-Italian joint ventures, as reported in a questionnaire submitted to the entire population of Italian enterprises operating in China. With an exceptional response rate of 60%, our evidence confirms most of the theoretical predictions and helps select among competing approaches to model joint ventures. (P. Natale). 1 Consistently with IMF/OECD definitions, FDI is an investment in a foreign company where the investor owns at least 10% of the ordinary shares, undertaken with the objective of establishing a lasting interest in the country, a long-term relationship, and a significant influence on the management of the firm

The world has a unique opportunity: Accelerating technology transfer and vaccine production through partnerships

“…Given the political risks, and institutional and market information constraints that are often faced by foreign companies in many developing countries, partnering with local firms to form joint ventures in host countries is one of the commonly used entry modes of foreign direct investment (FDI). The benefits of having a local partner have been widely recognized in previous studies, including gaining access to local markets and sharing business resources (Bontempi & Prodi, 2009 ; Gattai & Natale, 2013 ; Guillén, 2003 ; Kuo, Kao, & Chang, 2012 ; Moskalev & Swensen, 2007 ). Alliances also potentially create value by combining complementary resources and facilitating joint learning (Fu et al, 2021b ; Soh & Subramanian, 2014 ).…”

A New Cinderella Story: Joint Ventures and the Property Rights Theory of the Firm

“…This evidence and previous works (e.g. Hagedoorn, , ; Caloghirou et al ., ; Moskalev and Swensen, ; Gattai and Natale, ) show that JVs are indeed a very common form of inter‐firm collaboration and, unsurprisingly, the subject of a vast literature, extending from economics to management and business studies.…”

Grossman–Hart–Moore Goes to Italy: Rethinking the Boundaries of the Firm

“…The reader is referred toGattai and Natale (2013) for an exhaustive definition of joint-ventures. Unfortunately, we have no information regarding the exact percentage of ownership in our data and therefore we cannot condition on that in our empirical analysis.14 Note that the unit of observation in our dataset is firm i, not the individual relationship between firm i and each of its suppliers.…”