Institutional determinants of IJV partner choice in Europe: a host-country, a home-country or a third-country partner?

This study aims to examine the international joint venture (IJV) partnership strategy in Europe from an institutional perspective. A firm operating in a foreign country via an IJV can partner with a local firm from the host country, a firm from the same home country or a firm from a third country. This study takes the first step in examining the determinants of these partner choices.

This study tests hypotheses based on a data set of 637 IJVs in Europe.

Foreign firms are less likely to operate in a partnership with a firm from the home country or from a third country (compared to operate in a partnership with a local firm) when the host country institutions are weaker or institutional distance is larger. Also, foreign firms’ disinclination to operate in a partnership with a firm from the home/third country when the host country institutions are weaker or institutional distance is larger will diminish with greater host-country experience.

This study provides important insights for firms for evaluating partner choice and potential collaborations in the European region with heterogenous institutions.

The partner choice among the above three forms has been neglected in the literature. This study first conceptualized that the institutional profile of the host country and institutional distance between the host country and the home country can determine the partner choice.