In international joint venture (IJV), a long-term relational transaction, it is assumed that the partners face paradoxical situations. They cooperate to achieve their own or the common goals, at the same time have chances to behave opportunistically for their own interest at the cost of the others. That’s why control is needed in running and operating IJV.
The extant researches on control help us to understand the role and functions of control. However, understanding the role and function of control is different from those of strategic fit between the circumstances or conditions and the type of control needed. If a specific type of control is discussed in relation to the context or circumstances in which it is needed, deeper understanding on the role of control is expected.
The purpose of this thesis is to examine the role of a specific control mode (control type), specifically in relation to the context in which it is needed, that is, strategic fit. This thesis consists of two studies. <Study 1> deals with the effects of a specific control type on IJV performance and the mediating role of partner cooperation on IJV performance. <Study 1> examines the effects of control by focusing on the mode of control, i.e., type of control rather than the function it carries on. In this thesis control is classified as output, process, and social type.
Due to a distinct characteristic of IJV, the social relationship between/among partners, IJV is considered as a social network. In social network theory the role of tie strength is stressed in interpreting the effect of social network on organization. Tie strength is one of the critical factors that contribute to the IJV performance by preventing the partners opportunistic behaviors. Therefore the more if a partner can manage and promote tie strength between/among partners the more it can be expected to induce partner cooperation and commitment, so enhancing the IJV performance. This means the control type do moderating role on the relationship between tie strength and IJV performance. The main issues of <Study 2> is to empirically examine the role and effect of tie strength on IJV performance, and the moderating role of control type on this relationship.
Sample firms are drawn from the ‘2011/2012 Korean FDI Firms Directory’ published by KOTRA. Survey has been carried out from 12th of March to 30th of April, 2014. 136 firms are used for empirical tests. Multiple regression is used to test the hypotheses, and the analytical procedures suggested by Baron and Kenny (1986) and Hayes (2013) are used to test the mediating or moderating effects.
In <Study 1> the empirical results show that control, except output control, have positive effects on partner cooperation and IJV performance. Partner cooperation also has a positive effect on IJV performance. It also found that partner cooperation plays mediating role on the relationship between process, social control each and the IJV performance, but not on those between output control and the IJV performance.
In <Study 2> the results show that tie strength has positive effect on IJV performance. It is also shown that output control doesn’t play moderating role on the relationship between tie strength and IJV performance. Process control plays no moderating role but has direct positive effect on IJV performance. It is found that social control plays significant moderating role.
The empirical results of this thesis has several theoretical implications. <Study 1> confirms that partner cooperation plays mediating role between mode (type) of control and IJV performance, except the output control. This implies that partner cooperation can be viewed endogenous variable which can be managed and controlled as IJV evolves, rather than the exogenous one that is given from the beginning of IJV. <Study 2> confirms that each type of control plays a different role, specifically the moderating role on the relationship between tie strength and IJV performance. Though it is generally assumed that tie strength has a positive effect on IJV performance, the effect of it can vary due to the type of control involved. This suggests that when considering the effects of various independent variables on IJV performance (such as tie strength, type of resources, or capabilities involved in IJV, etc.), it is also needed to be involved in the model, the moderating role of control.