An empirical investigation of joint venture dynamics: Evidence from US-Japan joint ventures

Joint ventures generate information and lead to substantial information exchanges between the partner firms stemming from their interactions. Therefore, joint ventures are expected to have a feedback effect on their parent firms. We propose to test jointly the following hypotheses. First, there are two interaction scenarios between the joint venture partners: the parent firms become more alike in their competitive capabilities or their competitive capabilities become more dissimilar but complementary. Second, long-lasting joint ventures are those in which partner firms' competitive capabilities have become dissimilar but complementary. Using the partial least squares (PLS) technique and cross-sectional data on U.S.-Japan joint ventures in Japan we obtain supportive empirical evidence.