AIB 2012 Conference Proceedings - Academy of International ...

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performance dissatisfaction, more radical measures of control become likely, such as revision of the contract or
even the termination of the venture. (For more information, please contact: Linda Hy Hsieh, University of
Birmingham, United Kingdom: h.hsieh@bham.ac.uk)
Knowledge, Trust and Pixie Dust: Understanding the Complexities of Trust in IJVs
Mikelle A. Calhoun, Georgia Southern University
Akhadian S. Harnowo, Georgia Southern University
A critical commodity in international joint ventures ("IJV") is knowledge. IJV success often hinges on internal
knowledge transfer. However, trust is required for the freest flow of information and trust is more difficult
across cultures. The first contribution of this paper concerns the problem of trust and knowledge balance in
IJVs. Sometimes partners bring to the venture knowledge with a similar level of value – both high or both
low. The knowledge value contributed is balanced. In other IJVs, one partner contributes knowledge with higher
value than the other. This imbalance creates higher risk for the former and the latter has a greater need to be
trusted to gain access to the knowledge. Trust becomes the commodity that facilitates full and complete
internal transfer of knowledge. The second contribution of this paper concerns liability of foreignness ("LOF")
that attaches to the partner who needs to build trust. That partner does not have complete knowledge of the
other partner's market and culture, which hinders trust-building efforts. Analysis explains how LOF complicates
the IJV trust problem and reveals LOF is a problem that does not always or only attach to the foreign firm in the
IJV. (For more information, please contact: Mikelle A. Calhoun, Georgia Southern University, USA:
prof.calhoun@gmail.com)
Session: 1.4.8 - Competitive
Track: 8 - Developing Country MNCs
Institutions, Institutional Change and Internationalization of Developing Economy Firms
Presented On: July 1, 2012 - 14:30-15:45
Chair: Aya Chacar, Florida International University
Business Groups, Internationalization and Institutional Change: Evidence from India
Vikas Kumar, University of Sydney
Tamara Stucchi, Copenhagen Business School
Sumit K. Kundu, Florida International University
Business group affiliation is an important determinant of firm economic performance in the context of emerging
economies. However, relationship between business group affiliation and internationalization of firms remains
unclear. In the context of internationalizing emerging economy firms, many of which are affiliates of larger
business groups, the question of whether such an affiliation serves as a boon or bane in firm internationalization
is one of critical importance. We argue that institutional changes play an important role in shaping the
relationship between business group affiliation and the degree of internationalization. Our results, based on
empirical analysis of Indian firm data, indicate a negative relationship between business group affiliation and
the degree of internationalization during the initial period of major institutional change. In the latter period with
greater institutional stability, the negative relationship fades away. Our findings imply that advantages of
business group affiliation are location bound and do not easily confer to international operations. Also, business
group firms are slower than unaffiliated firms to adapt to a new institutional environment in times of significant
institutional changes. (For more information, please contact: Vikas Kumar, University of Sydney, Australia:
vikas.kumar@sydney.edu.au)
AIB 2012 Conference Proceedings
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