EIJVEquity International Joint Venture
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With an EIJV, since ownership is divided amongst two or more parents, controlling for the effects of potentially differing firm sizes, the financial exposure of each parent is usually less than in IAs or IGIs since each EIJV parent only has partial financial responsibility over the venture.
This is obviously important for the EIJV which has multiple parents, each with their own hidden agendas as well as operational and professed goals.
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.
This paper analyzes empirical data from 34 EIJVs in Hungary, in an attempt to develop a profile of parent firm and EIJV characteristics correlated with effective EIJVs in Hungary.
Considering the findings of Bivens and Lovell (1966) and their followers that the goals of private and government parents are driven by different mechanisms, such as the level of emphasis on non-profit motives, and the findings of Raveed and Renforth (1983) and many others regarding the decision-making complexity of mixed-sector ventures, investigating the impact of ownership type (state-owned versus public and private versus mixed-sector EIJVs) ON- EIJV effectiveness in Hungary would seem appropriate.
While it is too early to perform evaluations of the relationship between ownership type and EIJV effectiveness in Hungary, it is not too early to discuss the issue of parent core industry.
Numerous other authors have noted the importance of investigating cultural similarities when establishing an EIJV (e.g.
20) states that "the most effective means of maintaining control is simply to keep the alliance dependent on the parent's contribution." Lyles and Baird (1994) found that assistance from the foreign parent had a positive relationship with EIJV effectiveness in Hungary.
Accordingly, numerous authors note the importance of parent companies establishing a comprehensive business plan in order to ensure their EIJV's effectiveness (e.g.