Partner Selection in International Joint Ventures Jorma Larimo
Sami Rumpunen
KEYWORDS. Intemational joint venture, pârtner selection, selec[ion criteria
formance whereas selecting a non-suitable
INTRODUCTION
partner may lead to great problems in manage_ ment and decision-making and may even lead to leakage of tacit knowledge and./or to other problems, for example, with the image of the foreign partner. Results in several studies have indicated that 20 to even 70 percent ofthe IJVs are failures, a¡e unstable and/or do not meet the goals set for them. In several cases the problems are linked to the partner. Thus, parttional Marketing, Department ofMarketing, University of Vaasa, p.O. Box
[email protected]). Sami Rumpunen is a Reseucher, Department of ox 700, FIN-65101 Væsa, Finland (E-mail:
[email protected]).
:
Available online at htrp://jem.haworthpress.com O 2006 by The Haworth press. fnc. All rights reserved.
doi:10.1300/J037vl6n0l_09
f
tg
t20
Contewporary Euromarketíng: Entry and. Operational Decision Making
ner selection is a key issue in the IJV deci sion-making process. Therefore it is somewhat surprising that partner selection-at least a more detailed analysis of the selection-has received rather limited attention (see, e.g., Glaister & Buck-ley, 1997; Robson, 2002; Nielsen, 2003; Reus & Ritchie 2004). The goals of this paper are to analyze the relative importance of partner selection criteria in IJVs and to analyze the links between the selection criteria and UV performance, in order to examine whether there are clear differences in the relative importance given to certain criteria when a partner is selected for a successful or a poorly performing IJV- More spe-
cifically, the goal is to analyze the role of partner- and task-related selection criteria introduced by Geringer (1988). In addition, the goal is to analyze how the relative importance of partner selection criteria is influenced by
foreign partner specific, IJV location specific and investment-specific variables. The analysis is conducted from the point of view of the foreign partner in the IJV. Several of the analyzed relationships in this paper, especially the relation between the rela-
tive importance of the selection criteria and IJV performance, have so far been analyzed very limitedly. Thus, the paper offers clear
Joma Inrimo and Sami Rumpunen
lection. However, the amount of literature focusing on LIV partner selection in more detail is surprisingly limitedThe study by Tomlinson (1970) can be regarded as the first study focusing on IJV partner selection in more detail. In his study, Tomlinson analyzed the IfV behavior and performance of UK-based companies in 7l IJVs in India and Pakistan. Some years later he conducted a joint study with Thompson (1977) focusing on IJVs established by Canadian companies in Mexico. However, the study by Geringer (1988;
ex-
#i gree of the rela tion crit
tive importance of various selection criteria.
Therefore,_for the empirical part of the study is expected that:
1991) can be regarded as the groundbreaking
of categories of selection criteria, thus dividing the selection criteria into task- and partner-related selection criteria. Task-related selection criteria concem the skills and resources a firm would look for in its prospective partner, in response to consideration of the nature of its own potential contributions along with what the new business would require to be successful. Pa¡tner-related selec-
LITERATURE OVERVIEW
task- and parlner-related selection criteria categorization has been applied with minor modifications by Glaister (1996), Glaiste¡
DEVE LOPMENT OF HYPOTHESES Fo
majority of the literature focusing on IJVs includes at least some references to pa¡tner se-
pafner, whereas in the other studies the focus
reign partner-specifi,c varinbles. There
are several foreign partner-specifrc variables that might condition the relative importance of the selection criteria- Here we shall focus on the size, FDI experience, UV experience, and target country specihc experience of the for_ ergn partner. Size of the firm is likeiy to be related to the underlying motives for the IJV. Sma.ller firms may, for example, have more problems with limited management and financial resources and be more motivated to reach economies of
eign partner specific variables.
IJV location-specifr,c variables. The location ofthe UV, along geographic location, cultural a¡d geographic distance between home an ec
co ha
of distance--economic, cultural, geographic-the more simila¡ the home and host countries usu-
. In the study by Glaiste¡ and Buckley (1997) the location of the IJV was found to iÀfluence rhis kind of êxperito trust its paftner. an more easilv compensate the missing experience of thó local partner based on their own experience from
earlìe¡ FDIs, IJVs and/or target country and the IJV may more easily be only a temporary
and Buckley (1997), Tatoglu and Glaister (2002),
and Nielsen (2003). Furthermore, Robson (2002) focused only on ttre partner-related c¡iteria. The study by Tatoglu and Glaister (2000) differs from the others by anúyzing the views of both the foreign and the local
The influence of selecting the right partner on the success of the IJV has been suggested by a number of authors (e-9., Harigan, 1985; Glaister and Buckley, 1997). In fact, the
H1: The relative importance of partner selection criteria will vary with the for_
pared to the studies presented in Table 1.
is possible to provide a simple two-fold typology
contribution to the present stock ofknowledge on IJV partner selection. The structure of the paper is as follows: In the second section a general review of the existing literature will be made. In the third section hypotheses for the empirical part are developed. The fourth section consists of discussion on the main methodological issues and the key issues ofthe sample. The results of the study are presented in the fifth section. FinaÌly, the sixth section summa¡izes the results and includes the main conclusions based on the earlier findings and results of this study.
de-
limited ergn paftner specific variables on the ¡ela_
work focusing on IJV partner selection. Geringer suggested that despite the almost unlimited range of alternative criteria that might exist, it
tion criteria are those referring to the ability of the partner to work with the focal hrm effrciently and effectively (e.g., compatibility of top management teams). In contrast to task-related criteria, which focus on relative partner contributions to making a business prosper, partner-related criteria ¿¡e not contingent on the IJV context. Another main contribution by Geringer was the identification and estimation of the conelations of the key variables which affect the relative importance of some of the selection criteria (Glaister & Buckley, 1997). Geringer identified in total 27 different selection criteria, categorized into task- and partner-related criteria- From the later studies the
t2r
solution. T
)
I
')t
The only finding conceming the influence of foreign partner specific variables on the selection criteria was made by Nielsen (2003) in his study concerning IJVs and alliances of
pan than in the USA or Europe, whereas the role of the intemational experience ofthe partner was clearly lower in the former than in the iatter IJVs. Nielsen (2003) found that alrhough trust between top management, access to mar-
ket knowledge, and relatedness of partner business were highly ranked in all of the four reviewed areas (Westem Europe, USA, Asia, the rest of the world), the importance of sev-
Joru
Contenporqry Euromarkzting: Entry and Operatiorcl Decision Making
I2?
TABLE 1. Summary of the Key lssues in the Ma¡n IJV Partner Selection Studies
Or¡din of forê¡dn Dâdnårs
partnefs
Numbêr of oâdners f¡me per¡od
Gêr¡nger
lls*ì
Gla¡ster t1qs6ì
Gleister & Bucklev 11997ì
Tatoglu & Glâ¡ster l2O0Ol
N¡sl$n
USA
The UK
The UK
OECD
Denmark
Turkey
OECD, non-OECO (61% in WE)
USA, other industrialized
Weslem Europe
90
37 fE.lvsì
a2æ.4
N/A'
UK,
N/A2
2 NI/A
abþâd
Esìablished mainly in
lvlean age
Equity (n = 37) & Non-equity UVs ln -- 13ì
Equ¡ty & Non-equ¡ty
lndustry focus
Manufacturing/
Man ufacturing/
Fâdor analysis, Spearman Enk-order corelatjons, multiple regtesgon
Crosstabulat¡ons
(bivariale corelalions), panial corelations, factor
39
120
39 50%
33%
Estab¡ished ñainly
1
985-200 !
48 equity JVs, 72 non-equity JVs
Manufacturing/
Manufacturing/
Tìest, ANOVA,
T-Test, regresion
factor ana¡ysis
and factor analysis
T-test, ANOVA, mu¡tiple regress¡on, factor ana¡ys¡s
- 46,3% ¡n the whole prcjed
eral of the task- and partner-related selection criteria differed súongly among v¿ìrious regional areas. Hitt et al. (2000) found that developed market firms tried to leverage their resources to gain competitive advantages by searching for partners with unique competencies and local market knowledge and access, whereas hrms from emerging markets were looking for partne¡s with fi nancial capabilities. Furthermore, Glaister and Wang (1993) found that in LIVs established by UK-based comparies in China the ability to negotiate with host govemment, relatedness of business, trust between top management, and f,rnancial status/resources of partner were the most weighed criteriaThus, one would expect that for example product and/or production process related knowledge, brands and distribution systems are more weighed in OECD countries whereas
such crite¡ia as relationships with local government, access to labor, management, local markets and customs, etc., are more weighed in non-OECD countries/culturally and econom-
icaJly more distant countries. Furthermore, relations with local government seem to be much more important in non-OECD than in
OECD-countries. Therefore for the empirical part it is expected that:
H2: The relative importance of the partner selection criteria will vary with the IJV location specif,rc variables. I nv e s tme nt - s p e c ifi c v a riab I e s. Tltere is a large amount of issues that are specific only for a certain investment, with potential to effect UV partner selection. In this study the investmentspecifìc variables refer to the form of establishment, relatedness of the operation, relative partner size and the initiation for the IJV (i.e., which one of the partners initiated the UV partnership). It seems that the aaalysis of IJVs in several studies includes only units estabIished in the form of a greenfield investment .
(i.e., a separate new unit is established). However, an IJV ca¡ also be established by acquisition, i-e., one partner makes a partial acquisition ofthe other partner. There are some key differences between the two forms of establishment. G¡eenfield investment refers to everyttring being built from scratch whereas acquisition, here partial acquisition, refers to buying a share in an already existing company. Furthermore, greenfield investment always means expan-
123
sion to the existing total capacity, whereas a partial acquisirion does not mean increase in the existing total capacity. Finally, in a greenfield investment the first revenues come âfter a possibly long time period, whereas in a partial acquisition there are revenues straight after buying a sha¡e in the unit. Because of these
of sample firms only to two categories: the UK partner was bigger vs. the other partner was bigger. As stated by Glaister and Buckley (1997: 203), to the extent partners are either proactive or reactive with ¡espect to the initiative for the proposal ner's ape of par-
pending on the form of establishment. What concems the field of investment, an UV can be either related or unrelated to the business of the present operation of the foreign partner. In a related UV the foreign partner has ea¡lier knowledge and.experience from the field, and the goal for the unit is usually expanding into a new geographical area, increasing power and/or blocking competition. In an unrelated type of IJV the foreign partner does not have the field in orde¡ risks. Although the foreign company does not have product-specific experience, the management may rely that it can transfer the managerial, marketing, etc., knowledge gained from one fìeld to another fìeld. Howeve¡, because of these differences between related and unrelated types of IJVs, it may be expected that there will also exist differences in the relative importance given to various partne¡ selection criteria depending on the rype of the IJVConcerning the relative size ofthe IJV partner, the smaller the local IJV partner in relation to the foreign firm, the more likety it is that the relalive irnportance of some special product- and/or production-related knowledge, access to a valuable brand(s) is higher than in cases where the relative size of the local pafner is larger. In the latter case, such criteria as, for example, access to capitaVhnancial resources or ¡elations with local govemment may be expected to be given more importance than in the former cases. Against expectations, Glaister and Buckley (1997) found merely a non-signifi cant relationship between the rela-
betvveen initiating and non-initiating partne¡ fi¡ms. Their empirical results, however, indicated that the relative importance of the selec-
N/A
otJVs
Othsrfeatúres
llrethods of anâlysis
f2003ì
Inrimo ød. Smi Rumpunen
tive importance of the selection crite¡ia and the relative partner size in their UK-based sample. The authors assume that the non-significant differences may be dependent on the sample of their study and of the classification
to exist
tion criteria was virtually independent of which partner initiated the IJV partnershipThe criterion of the degree of favorable past association between panners was more important in those IJVs which were initated by the UK partner than in those initiated by the other partner or third-party intermediaries. Thìs indicated that the UK lrrms which were proactive in seeking to establish an IJV solicit partners from those foreign firms that were known to them. Confining the pool ofpotential paÉners to those foreign fi¡ms which were already known clearly reduced the searching costs offinding a suit¿ble paftner. Firms which were approached with the request to form an IJV were less able to control partner choice and so gave less prominence to previous relationships. The criteria of fina¡cial status/financial resources of the partner and the reputation of the partner firm were more important selection criteria for those UK partners which did not initiate the IJV. In summary, the influence of investment-
specific variables on partner selection has been analyzed very limitedly so far. For the empirical part of the study we expect that:
H3: The relative importance of partner selection criteria will va¡y with the investment-specihc va¡iables. Selection critería and IJV performance.Tlte research on IfV perlormance has received much more attention than the more detailed alalysis of the relative importance of various partner selection criteria. However, there are only a couple of studies taking a look at the relationship between performance and partner selection criteria.
Contemporary Eurorcrketing: Entry
124
Concerning the main reference studies, Nielsen (2003) analyzed the IJV performance but not its relationship with the selection criteria. Also, Tatoglu and Glaister (2000) focused only on the measurement of UV performance and on the analysis of the influence of the agreement between partners on the performance along various performance measures. In somewhat more detail, the relationship between the selection criteria a¡d IJV performance has been studied by Tomlinson (1970),
Beamish (1988), and Maurer (1996). OnIy Maurer could not find any relationship between selection critecia and IJV performalce.
Instead, Tomlinson found that companies which had given greatest weight to the favorable earlier relationship had experienced the best performance, while in cases where the status of the local partner and especially in cases where the partner selection was a forced choice, the level of performance had been clearly poorer. In the study by Beamish the best performance was found among companies where a high preference in partner selection was given to partner's ability to arrange capable managers to the UV, and where the partner provided access/knowledge to the 10cal economy and customs. The poorest performance was found among cases where high preference was given to partner's ability to satisfy requirements set by the host government concerning the sha¡e of local ownership. It is noteworthy that all of these three studies were focused on IJVs established in nonOECD countries. However, combined with the earlier discussion they give basis to assume that:
ød
Operatíonal Decision Making
collected during a period of over ten years from published news about new UVs, annual reports and www-sites of the 200 largest companies, earlier survey information by the first author) more than 130 companies having made
at least one manufacturing UV were identifìed. In total the companies had established somewhat more than 500 IJVs of which approximately 120 we¡e divested before 1999In those cases where the ðompanies had established several UVs, the preference was given to greenfield form of UVs and./or on IFVs where the ownership share of the Finnish partner was 25-75Vo and which had been at least two years in operation. Tbe compalies were fìrst contacted by telephone or email in order to confirm the interest of the company to participate the study and to identify the right person to answe¡ to the questionnaire planned for the study. As discussed by Geringer (1991), in some studies a key weakness is that the respondents have not been involved in the partner selection process. Thus, during the contact it was tried to confirm that the person really had knowledge of these issues (the ¡elalionship with the IJV was also asked separately at the end of the questionnaire). The four-page questionnaire also included other issues than only questions relating to partner selection, for example, questions with regard to the later development, evaluation ofthe performance, and performance of the unit along various measures.
Managers from a total of 47 f,rrms participated in the study. The total amount of IJVs covered by the survey was 69. However, in nine cases the managers did not fully answer
to the section covering partner selection or H4: The relative importance of the partner selection criteria will vary with IJV performance.
METHODOLOGY OF THE STUDY AND SAMPLE The ernpirical part of the study is based on survey data related to the IJV partner selection and IJV performance in manufacturing IJVs established by Finnish-based firms in OECD and non-OECD countries mainly between 1988-2001. Based on ditïerent sources (data
performance. Thus the final sample size in this study is 60 UVs (for more details see Table 2). As in several earlier studies, the relative importance ofthe task- and partner-related selection criteria was considered first by ranking of mean responses. Then, factor analysis was employed to derive a parsimonious set of selection criteria. The hypotheses were tested by considering differences in means ofthe importance of the selection criteria. Based on an assumplion that the sample was close to normal distribution, it was considered legitimate to use parametric tests of the hypotheses. Each of the Hl to H4 was therefore tested by conduct-
Jorma I¿rímo and. Sami Rumpunen
t25
TABLE 2. Character¡stics of the Sample ./" Number
60
Numberof partners
1
Yeâr ol investment
'1995 or
Fom of Ìnvestment
eâ¡lier
42
70
18
30
30
50
1996 or later
30
50
Greenfield
37
61,7
Acqu¡sitìon S¡ze of the fore¡gn pafrner (tumover2OOl)
Location
ofthe UV
3l
51,7
7
11,7
IOOO MEUR
Western Eurcpe
20
Easern/central Eastem Europe
22
36,7
Asia
15
25
22
36,7
Other Share of ownership ot the foreign padner
lndustry of lhe UV
lnitiâl approach to the IJV
Felative partner size
5
> 50% 50-50%
I
i5
< s0%
29
4€,3
lvletal Ìndustry
38,3
Forest industry
12
20
Other (chemical, plastic, foodstuff)
25
41,7
Finnish partner
43
71,7
Local padner or other
15
25
Fore¡gn panner > 50% larger
42
70
Other Joìnt venture suru¡val
100
St¡ll operating as
30
an UV
Changed into â who¡ly owned subsid¡ary
oivested/no Finnish ownershio in
ing two sample t{ests oTANOVA as appropriate. Because of the nature of the data these parametric tests were compared to equivalent
non-parametric tests (Mann-Whitney U and the K¡uskal-Wallis Test) as a check on rhei¡ interpretation following Glaister and Buckley (1997) and Nielsen (2003).
RESULTS OF THE STUDY Overall Results The results ofthe relative impofance ofvarious task- and partner-related selection criteria are presented in Table 3. Since the f,rve-point Likert type scale was used, the midpoint of the scale (3) ca¡ be used as the comparison. The ¡esults indicate that from the 21 task-related selection c¡iteria the midpoint was exceeded
2OOO/20O1
45
75
'11
18,3
4
67
only by two crite¡ia: the criteria of knowledge of the target market's economy and customs (3. l8) and the criteria of abiliry to permir fasrer entry into the target market (3.05). In addition, seven criteria received values between 2.80 and 2.98. Among the eight partner-related selection criteria, three criteria-our trust in the partner (3.48), strong commitment to the venture (3.41), and trust berween partners (3.39)exceeded the midpoint. Fu¡thermore, two criteria received values between 2.75-2.83, and two criteria values below 2. Noteworthy is that among the 29 various alternatives one of the partner-related selection criteria-pa¡tner is sim! la¡ in size-received clearly the lowest value (1.s0). As discussed ea¡lie¡, the comparison of results in various studies is difhcult because of somewhat different selection criteria used. The results by Geringer (1988) indicared rhar rhe
126
Contemporary Euromarketing: Entry and, Operational Decision Making
Joma Inrímo and Sami Rumpunen
TABLE 3. The Relative Importance of the Partner Selection Criteria
produced eight underlying factors (with
PAMNER SELEC.I]ON CRITERIA
Veriable
(T) Has knowledge of Þrget market's economy and customs
T-LOCKNOW
3,18
1,38
4
(T) Permits fæterentry into the target market
T-FASTENTRY
3,05
1,53
5
(T) Wìll enable thê venture to prcduce al lowestcost
T-LOWCOST
2,98
1,42
6
(T) Controls favorâble location for production
T.FAVLOCA
2,97
1,41
7
(T) Posesses needed manufacturing or R&D fecilities
T.FACILITY
2,93
1,44
(T) Hæ a valuable reputation
T-REPUTAT
CD Can supply
tæhnically sk¡lled personnel
CD Helps comply with government
Meen
2,70
1,31
16
2,67
1,53
2000)
17
2,62
1,46
18
o¡ four fa ¡espects the results of this study are very simi-
2,62
1,24
18
T-POSTSALE
2,43
1,42
20
O) Can enhance the venlure's expoñ opportun¡ties
T-EXPOPPORT
1,28
21
T-TRADEMFK
'I,45
22
T-CAPITAL
1,15
Íademark
Will provide finâncing/€pitalto
venture
(T) Possesses needed licenses, patents, know-how, etc.
T-LfCPATENT
2,08
1,37
24
(T) Enhances venture's ab¡l¡ty to make sales to gov /public companies
f-PUBLSECTR
1,8s
1,19
27
T-CREDIT
1,85
1,19
(P) Our trusl in the partner
P.TRUST
3,44
1,14
1
(P) Seems to hava a slrong commitment to lhe venìure
P-CO
3,41
1,25
2
1,26
12
CD Enables
venture lo qual¡fy for subsidies or credits
tvl tvl
rT
(P) Trust between pafrnêrs
P.I/UTRUST
3,39
(P) Top manegement oi both fkms are compât¡bte
P.IVIANCOMPAT
2,43
(P) Has relaled products
P.RELPROD
(P) Prior pos¡Ìive cooperatìon
P-PRIORBEL
(P) Has sim¡lar nat¡onal orcorporatê cúlture
lP) ls similâr in size or corDorâte
P-SilVlCULT
shdrrrê
concepts. composed a and thus no factor is composed of only partner-related selection criteria. As discussed earlie¡ in the previous studies seven to nine factors have been identified, expluningT0.gVo (Glaister &
T.LOCIDENT
T-GEN[/ANAG
Buckley,
1,34
seven, GENMANAG and TECHSKILL in factors one and eight, and EXPOPPORT in
factors two and seven. All those va¡iables received loadings exceeding 0.45 on both factors, and especially in the case of PRIORREL, the difference in the loadings was extremely low between the two factors. Also in the studv by Geringer (1988), several selection crirerá were included in two or even mo¡e factors.
1,95
1,06
oa9
Selection Críterin and Foreign Partner- Sp e c ific Variab le s
26
a
three most important single criteria were: strong
commitment to the UV, compatible management teams, and permits faster entry into the market. Geringer did not include trust in his selection criteria whereas the others have not included strong commitment among selection criteria in their studies. The other studies have indicated the great importance of such criteria as trust between management teams, relatedness of partner's business, reputation, knowledge of local market, financial status/financial resources, access to distribution channels, and access to links with major supplier/buyers.
Contrary to
all other studies, including this
shrdy, Tomlinson ( I 970) and later on also
Tatoglu
and Glaister (2000) found that earlier relationship was an important if not even the most important criteria, but according to Tatoglu and Glaister only from the local partner's point of view, not f¡om the foreign partner's point of view.
Føctor Analysis of Selection Critería
I i
I
i îI {
{ lc
The twenty-nine selection criteria represent a number of overlapping perspectives. Because of the potential conceptual and statistical overlap an attempt was made to identify a smaller number of distinct, non-overlapping selection criteria for the sample data by means of exploratory factor aaalysis. The facto¡ analysis
experience, but no support
e and FDI experience of the
Of the single mean values noteworthy are the very high mean values of the criteria of mutual trust and trust on the partner among those cases in which the Finnish firms had nõ earlier FDI and IJV experience (the only cases where a mean value offou¡ was reached or exceeded). Also the earlier results by Nielsen (2003) indicated the high importance of rrusr
Furthermo¡e, the results by Nielsen indicated that hrms having earlier experience laid more weight on the financial status and size of the partner than f,rrms having no earlier experience, whe¡eas the latter firms laid more weisht on favorable past association than the formJrs.
In this study the criteria of hnancial
subgroups- Instead, partner's reputation was
highly appreciated by firms without any ear-
ï !
if í1
T
j,
cally sìgnificant difference in mean
IfV
experience.
Selection Criteria and
In H1 it was expected that the relative importance ofselection cfiteria will v¿ry with the foreign partner-specific variables. The size and ea¡lier FDI, IJV and target country specific experience of the foreign partner were selected as the foreign partner-specific variables. Results in Table 5 indicate chat there were in total only two cases where the factors had means which were significantly difïerent: factor one based on UV experience and factor three based on target country specific experience. Thus, based on the size of the foreign partner and FDI experience, no factor indicated statistivalues-
Based on individual selection criteria results, in total 15 cases indicated sraristically significant differences. Seven ofthose cases were related to the extent of lJv-specific and five to
status,
prior relationship were not significant selection criteria among any of the f,rrm size and
lier
14 25
150
of
lar to the tìndings in earlier studies. Five individual selection criteria a¡e included in two different factors: REPUTAT in factors one and two, PRIORREL in factors one and
3
2,O7
may be concluded that Hl receives the cases of UV and target
indicating
12
O) Hæ access to postssâles seruiæ neùork
it
sitions) are composed of both task- ánd
T.LABCHEAP
acce$ to râw materials orcomponents
the extent of Carget country specific experience.
Thus,
of the f¿cto¡s (see Table 4 for factor compo-
14
(Ð Cen supply geneGl manageß to lhe venture
(¡
of the observed variance. Four
1,37
2.83
T.ACCESS
CD Has a vêluable
.75Vo
2,75
T.I\4ARKDIST
(T) Can provide bener aæess for your company's products
(T) Has
75
9
O) Has aæess to marketing or distdbution systems perceived local or nelional identity
of
11
2,85
(T) Can prcvide low cost labor to thê venture
eigenvalues over one) which explained a total
Renk
'1,51
T.GOVNEGO
(I) Ênhancæ
D€v.
'I,20
T-TECHSK¡LL
requirements/pre$ure
Sld.
127
IfV
Location
In H2 it was expected that the relative importalce of selection criteria will vary with the location of the IJV. The results (see Table 6) indicate that the¡e existed in total eight cases where the facto¡s had signif,rcantly different mean values. Especially in relation to factor three, all four measures of location indicated statistically significant differences- In addition, statistically significant influences of location-specific va¡iables were found on factor two and factor eight, in both cases based on the region ofthe UV and level ofeconomic devel-
opment of the target country. Between individual selection criteria statistically significant differences were found in 41 cases. Thus, the results give support to the view that the relative importance of the selection criteria really tend to vary with the location of the IJV. How
Contemporqry Euromqrketíng: Entry anl Operational Decision Making
t28
TABLE
4
Iom¿t Inrimo and Sami Rumpunen
Factor Analys¡s of the Selection Criteria Load
Alpha
TABLE 5. Select¡on Criteria and Foreign partner_Specific Var¡ables Eigen-
valuê
1"o, Cumulative vãr¡ence Vo
Size ot the F¡nnish paÁner (turnover 2001)
FACTOR
0,8895 7,406 25,538
Factor 1: Taust, top managemenl end comm¡tment (P) Trust between pafrners (P) Our
trud
in
(P) Top manâgement ol both
25,s
>
5OO
ln
0,8525
fims are æmpalible
FDI experience
MEURO
2000 km
30)
P-MANCOMPAT T-REPIJTAT
P.PRIOBREL
Jomø Larimo and Sami Rmpunen
fàctor three were clearly more hìghly rated in the non-OECD, culturally and physically more distant group. Especially cheap labor, production costs, and relations to the government/ public institutions received clearly higher means in these subgroups whereas in OECD countries fast entry and providing better access to the company's products were clearly more important than in non-OECD countries. Both results coincide with the earlier resuÌts. Both Glaister and Buckley (1997) andNielsen (2003) found that the selection c¡iteria of access to knowledge of local culture and ac-
In Hypothesis 3 it was expected that the relative importance of selection criteria will vary with the investment-specific variables. The results (see Table 7) indicate that the¡e existed in tolai eight cases where the selection criteria factors were significantly influenced by an investment-specific variable: three factors were influenced by the form of investment, two by the type of investment and relative partner size, and one by the initial approach ro the IJV. Related to factors six and seven, no statistically significant relationships were found along any of the four investment-specihc variabÌes. Thus, the diversification of differences aiong factors was greater than in the cases offoreign partner and IJV location-specific variables. Based on individual selection criteria staristically significant differences we¡e found in 43 cases: six were based on the initial approach to the IJV, eight on the relative partner size, ten on the type of investment and 19 were based on the form of investment. Thus. in summary it can be concluded that the results give strong support for H3 along the foIm of investment, moderate support along the type ofinvestment a¡d the relative panner size, ànd timired support based on the initial to the IJV.
IJVs should also be noticed. The first two diffe¡ences are easier to understand but the difference in the third case needs further analysis in future. Based on the relative size of the partner, noteworthy is that all the mean values are beIow 3.55-thus no very high mean values on any criteria among neither of the subgroupsa¡d that the differences are focused on selection criteria in task-related criteria in factors four and five. In the cases in which the Finnish partner was clearly larger the companies had laid more importance on local knowledge, facilities and on the relatedness of the operation, whercas especially capital was clearly more important in cases in which the size of the partners was more equal. Also in the study by Glaister and Buckley (1997) it was found rhat access to capital was important when the nonUK partner was larger than the UK partner. As discussed above, the fact of who had made the initial approach to the IJV had a smaller influence than the other three investment-specific variables on the relative weights of various selection criteria. Statistically sig-
nificant differences were tbund in six
cases
Contemporqry Euromarketing: Entry qnd Operqtionql Decision Makíng
132
Joma Lqrimo and Samí
TABLE 7. Selection Cr¡ter¡a and lnvestment-Specific Var¡ables Fñ.ñ
^t Greenf¡eld (n 3fJ
invÞcrmañl Acquisiìion (n 23)
Factor/Criteia
lvña
Totelly related (n = 39)
-n P.MtIIRI]ST
Âl ¡nvaêtñañt
n6
Finn.
panner
totally unrelated
> 50% larger
o21
ool
Olher (n
18)
Fìnnish
padner (n = 43)
-o
03
291
321
A A4.
341
333
-o
Other (n = 1s)
10 3 q3r
P-TRUST
3
75..
305
335
3-95,
353
339
334
4 00r
P-I\4ANCO[¡PAT
3-14.'
235
274
311
271
311
2.74
320
P-COt\4tlllT
278
342
336
353
T-BEPUTAT
3.04
2,74
2.88
3.00
T-ftraHsKn
413 2.84
r
P-PRIORRFI
-o23
-o
07
o 16
T-PÕSTSAI F
204
3
00ri
234
T-MAFKDIST
251
3
35'
292
279
T.TRADEMFK
189
2-7A"
204
253
2.44
304
274
3.32',
02
o05
o03
245
239
240
243
2æ
272
2AO
224
213
2AA
313
-o
248
3.00
-0,18
-o
oq
0.49"
316
342
302
243
331
26s 213
242
T.GOVNEGO
289
295
293
265
303
1,96
2,41
3.21"
2,40
3.1
f'
27?
264
320
2.51
2.87 21
T-I OCKNOW
T-ACCFSS
?51
Fâctor 5
o17
T.CAPIIAL T.CREDìT
189
P-RELPROO
311
3
3 13-
?46
250
270
2â
o05
161
221
-o
o?5 165
o 14
o22
330
230
T.LOCIDENT
167
2-29'
176
180
ô1
o01
179
2 32r.
-o
2,81
ôñ1
14
11
-o
,14. o17
-ñ
195
-o
-o
10
191
03
o07
-o
05
o14 253
204
216
195
233
133
2a
o52
019
o12
264 238
358
-0 08 293
2A9
291
3.O7
260
2,67
2,60
2,87
-o
196
T-GEN¡,1ANAG
247
2,89
Facbr
T.TECHSKILL
214
192
179
-o
004
294
2,69
P.PFIÔFREL A
069
178
-õ 17
2a
190
04
3,04
P-StMClltT
¿5'.
237
-o
2,90
3.21*
2.93-
-o
32
3,O7
p=0,1 "p
