amj Australasian Marketing Journal - ANZMAC

and practical need by integrating the political economy framework
with relational exchange theory. It widens the scope
from economic and legal issues, to social, structural and
cultural issues that are often the make or break of IJVs.
A number of implications are suggested. Firstly, by focusing
on the interaction between the internal economy and the internal
polity, we have demonstrated that the form of governance
of an IJV relationship will influence the nature of the relationship
between the partners. Recognising the different
requirements of different types of relationships may result in
more successful IJV relationships. Secondly, by focusing on
the dyad, the framework encourages managerial recognition
of the partnership rather than the single firm. This highlights
issues such as cooperation, joint decision-making and mutual
(vs. one-sided) benefits. Thirdly, the importance of relationship
maintenance variables has been highlighted through the
introduction of relational exchange theory, suggesting that
this should be a focus of IJV relationship formation and maintenance,
in addition to issues such as contract negotiation and
economic cost/benefit analysis. Finally, the discussion has
recognised that the role of cultural sensitivity, a managerial
concern in IJVs, is related to the governance form in an IJV
relationship.
Importantly, the framework provides managers with guidance
on the how questions as well as the what questions. That is,
by including day-to-day management issues relating to decision-making,
the development of trust, communication, social
bonds and the relative importance of cultural sensitivity,
managers are not only alerted to what issues they should be
focusing on, but how each of these issues should be dealt with
under different circumstances. In doing so, the framework
presented here views an IJV as a social entity in addition to an
economic and legal entity. The management of an IJV therefore
needs to explicitly incorporate social phenomena rather
than leave it to chance. The view that business is a social
activity with economic outcomes (e.g. Ambler and Styles
2000) is increasingly gaining acceptance. Both theory and
practice would benefit by exploring these issues further to
ensure a good match on paper does not fail, or fail to fully
exploit market opportunities, because of sub-optimal social
behaviour and structures.
The framework also highlights the need to place greater
emphasis on the selection and management of the people
involved in IJVs. Spekman, Isabella, MacAvoy and Forbes III
(1996) attribute the causes of partnership failures to an insufficient
focus and understanding of the partnership management.
They advocate the importance of the partnership
manager and his/her central role in the success of that partnership.
They also argue that the partnership manager (such as
the strategic alliance manager) takes a successive number of
roles throughout the development process of the partnership
(e.g. advocate, networker, or mediator) and the success of the
partnership depends on his/her performance within these
International Joint Ventures
roles. A key underlying characteristic among those roles is the
manager s ability to communicate effectively and instill trust
in their partners (Phan, Styles and Patterson, 2000). Duncan
and Moriarty (1998) argue that effective communication (and
specifically information exchange between partners) is the
tie that binds any relationship . Thus, managers for IJV
assignments need to be screened for these social skills as
much as technical and marketing skills, for example.
The framework also suggests the need for regular measurement
and feedback of the social workings of the IJV. The
concept of a regular partnership audit is therefore relevant. As
is often done with long-term supplier relationships (e.g.
advertising agency/client relationships), an annual audit of the
IJV relationship (vs. just its economic performance) would
highlight those behaviours and social structures that are
contributing to success as well as highlight areas where
improvements could be made. In fact, the process of the audit
itself (like is often the case with planning) may be the key to
developing greater understanding between partners and lead
to structural and process improvements.
The integration of relational exchange theory and the development
of the political economy framework of IJVs have
suggested some future avenues of research. Firstly, the propositions
that were derived from the framework should be
explored empirically, ideally across different cultural settings
i.e., amongst IJVs involving firms from different countries. In
addition, the relationship maintenance variables suggested in
the model should be further conceptually and empirically
developed within the context of IJVs. Future research should
determine whether these variables are conceptually different
from those in other interfirm partnerships and if there are
additional variables specific to IJVs. Future empirical
research should: 1) be dyadic to account for both perspectives
of the partnership (Li and Shenkar, 1997; Lin, Yu and Seetoo,
1997) and; 2) involve methodologies appropriate for generating
data on soft variables, such as qualitative case studies
(Parkhe, 1993). Research should then be widened to include a
range of different alliance forms, such as non-equity alliances,
licensing arrangements and franchising, to name a few.
Further, this paper has only considered the internal economy
of IJVs. A future area of research is the external environment
of IJVs and its interaction with the internal political economy
of IJVs. Finally, the introduction of relational exchange theory
suggests that future research should consider the process of
IJV relationship formation and maintenance.
6. Implications
In the past, business practitioners and public policy makers
have focused on the legal and economic aspects of international
joint ventures. However, the view that business is a
social activity with economic outcomes (e.g. Ambler and
Styles 2000) is increasingly gaining acceptance. The introduction
of relational exchange theory and the application of
Australasian Marketing Journal 9 (1), 2001 27