EIJVEquity International Joint Venture
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EIJV negotiations between potential partners generally do not have time limits and may sometimes last for several years.
With an EIJV, there are two or more owners, at least one of which is foreign.
In an EIJV, there can be a combination of parent company ownership types, and this combination may cause serious conflicts.
EIJV negotiations among potential partners can be less secretive since there is no existing entity for a competitor to bid on.
With an EIJV and an IGI, parent companies must expend a considerable amount of resources, capital, and time creating and developing a new enterprise before significant benefits can be realized.
Due to the fact that EIJVs involve multiple partners with their own individual agendas, trust is crucial to EIJV management.
Numerous other authors have noted the importance of investigating cultural similarities when establishing an EIJV (e.
Lyles and Baird (1994) found that assistance from the foreign parent had a positive relationship with EIJV effectiveness in Hungary.
When goals of EIJV parents are incompatible, this can cause confusion within the EIJV and decrease effectiveness.
By having parents carefully evaluate alternatives and by providing a clear strategic mission and direction, perceived EIJV risk can be diminished.
The results of these studies have been anything but conclusive, with some authors finding majority parent EIJVs to be more effective, while other authors recommend equal distribution between EIJV partners, and still others finding no relationship at all between the equity split and effectiveness.
Available data does allow us to test parent satisfaction with the EIJV equity split.