ABSTRACT

Joint ventures have long been used by entrepreneurial firms to expand into new markets, particularly within newly industrializing nations. This chapter sketches firms' uses of "operating joint ventures" in light of the pressures created by international competition. It presents a framework for predicting how parent firms might configure joint ventures to achieve these competitive purposes. "Operating joint ventures" are partnerships by which two or more firms create an entity, a "child," to carry out a productive economic activity. Operating joint ventures could include manufacturing arrangements, such as the titanium steel mill of Allegheny International, Sumitomo Metal, and their partners. "Global strategies" are those which recognize that competition can no longer be confined to a single nation's boundaries. Parent firms embrace joint ventures because they are ways to implement changes in their strategic postures or to defend current strategic postures against forces too strong for one firm to withstand.