Abstract

Based on an in-depth study of U.S.-China joint ventures, this article offers some insights into the performance of such international business relationships. While the conventional literature treats government as an amorphous aspect of the political-legal environment, in this case government is an active participant and influence in the performance of international joint ventures (IJVs). It has both a constraining and enabling effect on IJV structure, strategy, and performance. For example, limits can be placed on ownership shares of joint ventures and on prices of the output. At the same time, government can cooperate with IJVs and foreign parent companies by creating partners for foreign parent companies, acting as major customers, and improving financial performance by lowering taxes.