An empirical analysis of factors explaining foreign joint venture performance in China

Little empirical evidence exists to explain the success factors in international joint ventures in developing countries. This article fills a void in the literature by studying factors underlying the performance of foreign joint ventures in China. An intersection of 2,442 joint ventures registered with the Ministry of Foreign Economics Relations and Trade from 1979 to 1990 and 383 joint ventures honored by the China Association of Enterprises with Foreign Investment constitutes the sample of this study. Level of partner commitment, the number of joint venture partners, sociocultural distance among partners, product/industry characteristics, foreign control, and joint venture location in China are factors used to explain performance. Some of the prescribed relationships are supported by the empirical findings. With the exception of product/industry, control, and location, the factors used in this study are found to be significantly related to performance.