2022 Volume 14 Issue 2 Pages 39-51
The purpose of this paper is to identify the factors that drive the acquisition and transfer of IJV shares by multinational corporations (MNCs) and local partners in international joint ventures (IJVs). Focusing on the dependence among the investing firms in an IJV, we develop hypotheses regarding the effects of local sales and local procurement of the IJV, as well as the MNC’s business experience in the host country, on the change in the shareholding of each investing firm in the IJV in question. The following trends were found in the analysis of IJVs in the manufacturing industry in Japan. (1) The higher the ratio of local sales and local procurement, the more MNCs tend to transfer their shares in the IJV to their local partners. (2) The higher the local procurement ratio of an IJV, the less likely MNCs are to acquire the shares of the IJV held by the local partner company. (3) When the MNC has long business experience in the host country, the relationship between the IJV’s local sales ratio and the MNC’s acquisition of the IJV’s shares from the local partner is positively moderated. (4) When the MNC has long business experience in the host country, the relationship between the local procurement ratio of the IJV and the MNC’s transfer of shares in the IJV to the local partner firm is negatively moderated. These indicate that although localization of sales and procurement, which are positioned downstream and upstream in the value chain, forms a dependency relationship between MNCs and local partner firms in manufacturing IJVs, MNCs may change this relationship as they gain business experience in the host country.
