Abstract
Five factors account for the growing use of joint ventures by US multinationals: 1. The governments of many countries with attractive domestic markets try to restrict foreign ownership. 2. Many US firms have found that host country partners could help them enter new markets quickly by providing management expertise and local connections. 3. There is intensifying competition from European and Japanese automobile makers. 4. Foreign firms have become more attractive joint venture partners for US multinational corporations as their technological capabilities and market presence have grown. 5. Global scale is becoming a distinct competitive advantage. When a firm seeks to expand its capabilities, a joint venture might be appropriate. However, if a firm aims to exploit its existing competitive advantage, a joint venture is less appropriate. A statistical analysis suggests that vertical integration between a joint venture and its partners could affect the likelihood of conflicts between them.