Abstract
While some instability in joint ventures stems from the same sources that result in instability in wholly-owned ventures, it also is the result of elements that are unique to that organizational form. Although they allow firms to expand abroad rapidly, joint ventures are nonetheless not the ideal instrument to take advantage of the increased opportunities. The evidence for joint venture instability in a sample of over 5,000 subsidiaries of 180 large US multinational firms is investigated, and the instability of jointly owned and wholly owned ventures are compared. The possibility that instability in ownership structures reflects sequential strategies in foreign investment is explored. In some cases, ownership changes after entry constitute corrections of mistakes made when the subsidiaries were first set up. However, they represent adaptations to changes in the environment in other cases. Changes in the environment sometimes result from actions of the joint ventures themselves. In the latter cases, it is suggested that joint venture instability may be seen as a sign of success, rather than failure.