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It is widely believed that firms choose joint venture forms overseas when confronted with high socio-cultural distance. However, the probability of choosing the joint venture form is expected to be moderated by the firm-specific characteristics of the investing firm as well as country-specific characteristics of the country of investment. This study examines the moderating role of some firm- and country-specific factors on a firm's choice of joint venture form in response to socio-cultural distance. The firm-specific factors examined in this study include size, multinationality, and technological intensity; and the country-specific factors examined in this study include country risk and market potential. Recent data from a sample of U.S. manufacturing firms is used to test the contingency hypotheses. Results indicate the usefulness of the contingency approach for modeling choice of joint ventures.
Sanjeev Agarwal (Wed,) studied this question.
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