Determinants of Decision Rights in International Joint Ventures The Role of Intangible Knowledge Assets and Uncertainty

29 Pages Posted: 17 Oct 2019

Date Written: November 17, 2018

Abstract

This paper explores the determinants of decision rights allocation in international joint ventures (IJVs) by developing a theoretical framework based on the property rights and transaction cost explanations. We posit that the allocation of residual decision rights is influenced by the distribution of intangible knowledge assets important for the generation of residual income and by the environmental uncertainty. Based on the property rights theory, we show that the less contractible strategic knowledge assets have a stronger impact on the assignment of residual control rights to the JV partners than the more contractible operational knowledge assets. Under transaction cost economics perspective we focus on three environmental determinants: institutional uncertainty, cultural distance, and market uncertainty. We argue that the higher the environmental uncertainty in the host country, the more residual decision rights should be allocated to the local partner. Empirical data from IJVs in the CEE provide support of the hypotheses.

Keywords: Joint ventures, intangible knowledge assets, uncertainty, residual decision rights

JEL Classification: L24, M16

Suggested Citation

Windsperger, Josef and Galak, Oksana, Determinants of Decision Rights in International Joint Ventures The Role of Intangible Knowledge Assets and Uncertainty (November 17, 2018). Available at SSRN: https://ssrn.com/abstract=3466151 or http://dx.doi.org/10.2139/ssrn.3466151

Josef Windsperger (Contact Author)

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, A1090
Austria

HOME PAGE: http://im.univie.ac.at

Oksana Galak

University of Vienna ( email )

Oscar-Morgenstern Platz
Vienna, Vienna 1090
Austria

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