On the relationship between initial motivation, and satisfaction and performance in joint ventures

Abstract

While internalization theory suggests that it is more beneficial for MNEs to internationalize through wholly‐owned subsidiaries rather than engaging in joint ventures, this paper argues that the joint venture approach can be successful. Based on a study of 42 international joint ventures in Bahrain, the paper shows that satisfaction after start up is a function of the structure of the initial motivation. Past and anticipated future performance of the joint venture are also functions of the structure of initial motivation, and performance is best viewed as an intervening variable in satisfaction. Environmental factors were more significant than economic factors in the initial motivation decision.