ABSTRACT
Setting up international joint ventures (IJVs) has become one of the most important ways for firms to expand their activities across national borders. Small-and medium-sized enterprises (SMEs), in particular, have shown a tendency to prefer this method of internationalisation over wholly owned subsidiaries (WOSs), as it better accounts for their limited resources and international experience. However, even for large MNEs, IJVs can promise advantages over WOSs or they may be the only viable option for entering a country due to restrictions of foreign ownership. Various theories have been suggested to explain the existence of international joint ventures, such as the resource dependency theory (Pfeffer and Nowak 1976) or transaction cost economics (Buckley and Casson 1988).
