Factors Influencing International Joint Ventures’ Performance An Investigation into the Telecommunication Industry in Laos

1 1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos .... 65 4.2 Factors Influencing IJVs’ Performance in the Telecommunication Industry in Laos .... 1.1.2

I would like to express my sincere appreciation to all the people who helped

me during my doctoral research course

First of all, I am forever indebted to my supervisor Associate Professor Dr NGUYEN THI TUYET MAI (National Economics University – Vietnam) with her fantastic personality and unbelievably supportive approach, and my colleagues Without their guidance and continuous support this dissertation could not have been completed I have learned a great many insights from all of them during the dissertation project They really helped me as a team, and I also consider them not only as my teachers, but also as my friends Thank you!

I am also grateful to my office in encouraging me to achieve higher education at National Economics University, Vietnam Besides, my dissertation will not be completed without the honestly help of interview team and interviewees from International telecommunication ventures in Laos I greatly appreciate the help and the time these people have spent on me

Last but not least, I would not have been able to pursue my studies without the help of my family: thanks to my parents, my brother, my wife, and my children who have been giving me the endless love with supports and strength

Table of Contents

Acronyms iii

Table of Figures v

List of Tables vi

CHAPTER 1: INTRODUCTION 1

1.1 Research Motivation 1

1.1.1 International Joint Ventures (IJVs) in Telecommunication industry in Laos 1

1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos 4

1.2 Theoretical Background 7

1.3 Research Methodology 7

1.4 Contribution of the Study 8

1.5 Organization of the Study 10

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 12

2.1 Literature review on International Joint Ventures’ Performance 12

2.1.1 Survival and Longevity 14

2.1.2 Financial Output Measures 15

2.1.3 Overall Satisfaction 16

2.1.4 Goal Achievement 17

2.1.5 Learning 18

2.2 Literature Review on Factors Influencing IJVs’ Performance 19

2.2.1 Control of the IJV 21

2.2.2 Trust 22

2.2.3 Cooperation and Commitment 24

2.2.4 National Culture and Corporate Culture Differences 26

2.2.5 Goal Compatibility 30

2.3 Conceptual Framework 31

CHAPTER 3: RESEARCH METHODOLOGY 34

3.1 An overview of Research Approach and Research Design 34

3.2 Case Study Method 36

3.2.1 Secondary Research 37

CHAPTER 4: RESEARCH FINDINGS 47

4.1 The Current Status of IJVs’ Performance in the Telecommunication Industry in Laos 47

4.1.1 The Telecommunication Industryin Laos 47

4.1.2 Performance of the IJVs in the Telecoms Industry in Laos 65

4.2 Factors Influencing IJVs’ Performance in the Telecommunication Industry in Laos 73

4.2.1 Identification of Factors Influencing IJVs’Performance 73

4.2.2 The Impact of Several Factors on IJVs’ Performance - Regression Findings from Individuals’Perception 86

CHAPTER 5: CONCLUSIONS AND DISCUSION 96

5.1 Conclusions 96

5.2 Discussion 97

5.2.1 Research Implications 98

5.2.2 Limitations and Future Research Directions 103

REFERENCES 106

APPENDICES 121

Appendix 1: Information about all key service providers in telecom industry in Laos122 Appendix 2: GUIDELINE FOR IN-DEPTH INTERVIEWS 124

Appendix 3: QUESTIONAIRE 125

ADSL Asymmetric Digital Subscriber Line

ADB Asia Development Bank

ASEAN Association of South East Asian Nations

ARPU Average Revenue Per User

BMI Business Monitor Investment

BTA Bilateral Trade Agreement

BTS Base Transceiver Station

CDMA Code Division Multiple Access

EDGE Enhanced Data Rates for GSM

ETL Enterprise of Telecommunication Laos

FDI Foreign Direct Investment

GDP Gross Domestic Product

GMS Greater Mekong sub-region

GPRS General Packet Radio Service (GSM)

GSM Global System for Mobile Communications

GOL Government of Laos

ICT Information and Communication Technologies

IJVs International Joint Ventures

ISPs Internet Services Providers

ITU International Telecommunications Union

Lao PDR Lao People’s Democratic Republic

LANIC Lao National Internet Committee

LAK Laotian Kip

LTE Long term Evolution

MCTPC Ministry of Communication Transport Post and Construction MDGs Millennium Development Goals

MNEs Multiple National Enterprises

MIC Ministry of Information and Culture

MPT Ministry of Post and Telecommunications

NAPT National Authority on Post and Telecommunications

PCs Personal Computers

PM Decree Prime Minister Decree

PSTN Public Switched Telephone Network

ROI Return on investment

ROE Return on equity

ROA Return on assets

SIM Subscriber Identification Module

SMS Short Message Service

STL Star Telecom

USAID United States Agency for International Development

VoIP Voice over Internet Protocol

WLL Wireless Local Loop

WiMAX An air interface standard for fixed broadband wireless access

(BWA) systems employing a point-to-multipoint architecture

Figure 1: A Conceptual Model for Studying Factors influencing International Joint

Ventures’ Performance 33

Figure 2 Research Design 35

Figure 3: Secondary Data and their sources 38

Figure 4: Laos Mobile Sector 2010 – 2017 50

Figure 5: Laos Mobile ARPU 2010 – 2017 52

Figure 6: Laos Fixed-Line Sector 2010 – 2017 56

Figure 7: Laos Broadband sector 2010 – 2017 59

Figure 8: Laos internet Market growth 2003 – 2011 61

Figure 9: Laos Broadband Market growth 2005 – 2011 62

Table 1: Interview summary 41

Table 2: Demographic Profile of Respondents 44

Table 3: Telecoms sector in Laos – Historical Data and Forecasts 49

Table 4: Key players in Laos’ telecoms sector 66

Table 5: Perception of performance of LTC (N = 31) 67

Table 6: Perception of performance of Unitel (N = 26) 69

Table 7: Financial performance of Tigo/Beeline in the period 2010-2013 71

Table 8: Perception of performance of Beeline (N = 30) 72

Table 9: Perception of performance of the 3 IJVs (N = 87) 73

Table 10: Perception of control mechanism at the 3 IJVs (N = 87) 75

Table 11: Perception of Trust at the 3 IJVs (N = 87) 78

Table 12: Perception of cooperation and commitment at the 3 IJVs (N = 87) 79

Table 13: Perception of goal compatibility at the 3 IJVs (N = 87) 82

Table 14: Perception of cultural differences at the 3 IJVs (N = 87) 85

Table 15: Summary of descriptive statistics of 3 IJVs and ANOVA results………86

Table 16: Performance measures and factor loading results (N = 87) 88

Table 17: IDVs’ measures and factor loading results (N = 87) 90

Table 18: Descriptive Statistics and Correlations (N = 87) 922

Table 19: Regression results (N = 87) DV: Financial Performance 93

Table 20: Regression results (N = 87) DV: Overall Satisfaction 93

Table 21: Regression results (N = 87) DV: Goal Achievement 94

Table 22: Regression results (N = 87) DV: Learnings 95

1.1 Research Motivation

1.1.1 International Joint Ventures (IJVs) in Telecommunication

industry in Laos

Lao People Democratic Republic (Lao PDR) is located in the central part

of the Indochina peninsula The country covers about 236,800 KM2 and has a population of just over 6.5 million (2012 census) Lao PDR shares borders with 5 countries: Vietnam to the East, China to the North, Union of Myanmar to the Northwest, Thailand to the West, and Cambodia to the South Since 1986 when the new Economic mechanism was adopted, the government of Lao People’s Democratic Republic (Lao P.D.R) has been promoting social and economic development under the policy of a market oriented economic During 2001-2005, Lao PDR had an average annual GDP growth rate of 6.2 percent, and it has increased to 8.1% in 2012.During 2006 – 2008 he average GDP per capita was approximately USD 700, and in 2011 it grew to over USD 1,300 (World Bank 2012) The service sector contributed to 26 percent of Laos’ GDP In 2008, the telecommunications sector accounted for approximately 1.6 percent of the total GDP and is considered one of the fastest growing sectors in Laos For example, since 2000, competition in the telecommunications boosted investment in the sector dramatically Investment per year jumped from USD 19 million in 2000 to USD 154.9 million in 2008 (USAID, 2009)

Telecommunication technology plays a significant role for the flow of information It is an extremely useful tool to spread knowledge and new ideas, which can reduce infrastructure development gap between people in rural and urban area Furthermore, it can improve education, health care services, and encourage business activities In addition, it also plays the crucial role to the national economic development, especially to the developing country like Laos Therefore, telecommunication technology development is one way that Lao government uses to generate revenue and create job opportunity for people In addition, Lao government aims to improve people living standard and increase

development of telecommunication technology with the intention to promote sustainable development of the nation

In line with the new Economic mechanism, the Telecommunication sector

in Laos was privatized at the year 1996 as a joint venture with a Thai investor (Shinawana International Public Company Limited) However, this telecom privatization policy has been revised due to the importance of a national telecommunication development strategy which is able to resolve keen issues such as digital divide among regions and the frequent telephonic traffic congestion caused by a deficiency in the nation-wide telecommunication facilities (eg switching and telephone line capacity and human resources) (MCTPC, 1982; MCTPC, 1990 &1995; MCTPC, 1990 – 2007)

Besides, Lao P.D.R has a responsible position for promoting telecom development programs planned for the Greater Mekong sub-region (GMS) This development concept of GMS proposed by Asia Development Bank (ADB) and

is applied to an area or regional development approach to GMS, promoting networks among the six Mekong riparian countries, including supporting activities for a common standard of telecom services availability which is increasing in Laos Telecommunication increased steadily from 2007 to 2011 (MCTPC, 2007 – 2011)

There are some communication policy studies undertaken by scholars and media and political organization, but research on International Joint Ventures (IJVs) in Telecommunication industry in Laos has been limited Especially, it seems that very modest attention has been given to investigateIJVs’ performance and factors influencing it in the industry in Laos Thus, these issues will be the focus of this research

Regarding telecommunication service policies in Laos, National Authority

of Posts and Telecommunication (NAPT) was established on 22nd October 2007

by the PM Decree No: 375/PM NAPT is an organization under the Prime Minister office, dealing with policy, strategy and its implementation and

Information and CommunicationTechnologies (ICT) in Laos NAPT is responsible for both the policy making and regulatory function for Telecommunication and ICT sectors On 15th June 2011, NAPT has been upgraded to Ministry of Posts and Telecommunications (MPT) (MCTPC, 1990 – 2007; MCTPC, 2011) Moreover, Telecommunication Act was passed and entered into force in 2011 Telecom sector policy 2004 of Laos government has stake in all the operators Based on ASEAN framework agreement on science, for value addedservicesthe new entry can only take place into Laos through a joint venture with Lao’s service provider or acquisition of existing operators Under BTA with America, Laos has made commitments to provide unrestricted market access and full national treatment for the whole range of basic fixed and mobile (on the facilities basic or by resale, through any mean of technology, as value-added telecommunication service) (MCTPC, 2004)

Related to telecommunication providers in Lao P.D.R, there are five authorized enterprises which are providing fixed and mobile telecommunication services in Laos All these providers have the government ownerships, including: Lao Telecommunication Corporation Limited (LTC) with Government of Laos (GOL) and Shinawatra (Thailand) share 51% and 49% of possession respectively; Enterprise of Telecommunication Laos (ETL) with GOL 100% but currently become to ETL public; Star Telecom (STL): GOL 51% and Viettel Global 49% (now has been renamed to Unitel); Milliom international cellular SA (now has been transferred to Vimpelcom Russia (Beeline): GOL 22% and Vimpelcom 78%; and SKY communication Laos (SKY) withGOL 100% (since 2010) (before 2010 – foreign private owner)

The number of internet service providers (ISPs) has grown from two in 1990s to about seven after nearly 15 years They are ETL internet, Lao telecom Planet online, Lane Xang internet, Sky telecom KPL and Mill com The entry of Milliom and Sky, the large shareholding by Shincorp, the operation of Planet and prevalence of Voice Over Internet Protocol (VOIP) operators show that private

regulatory regime However, such investors are still primarily focus on central of Vientiane and major urban center Therefore, adjustments are necessary to be added to current policies and regulatory framework in order to further develop the telecom sector through these strong private investors (MPT, 2011)

1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos

Many scholars and practitioners have conducted research about what factors affecting the performance of IJVs However, their research has mainly conducted in the context ofthe developed countries (Ren et al., 2009) Many previous studies (e.g., Hoang & Rothaermel, 2005; Isobe, Makino, & Montgomery, 2000; Luo, 2001; and Tong et al., 2008) have examined IJVs performance, which enhanced human beings’ knowledge about this attractive topic However, the conceptualization of IJV performance and factors influencing it remains an often-debated issue in IJV research (Reus & Ritchie, 2004)

In recent years, more researchattention hasbeen given to studyIJVs performance and factors influencing IJVs performance in the context of developing countries (e.g Phan & Ngo, 2009; Phan et al., 2006; Cao, 2012) but

it seems that very modest research attention has been given to investigate the impact of these factors in the context of Laos, especially no study has examined the issue in the Telecommunication industry in Laos In other words, this attractive topic has not been investigated adequately in the context of Laos, especially in the telecommunication sector

The telecommunication technology in Lao PDR is at the infant stage in terms of development in comparison with other countries in the ASEAN region

It is due to the low percentage of consumption and the limited use of only in big cities The main cause of low consumption may be due to the population lack of purchasing power and awareness of the important of telecommunication

experts There are only few schools in the country offering courses concerning ICT Moreover, they still have not met international standard yet However, nowadays telecommunication technologies in Laos are changing very fast So, all telecommunication service providers need to pay great attention to keep an eye

to the latest technologies

In order to survive in the market that has very high degree of competition especially, competition on the price, new technology, and quality services, many communication companies are rushing to find out new things to offer to the market for their customers In the recent years, the price of SIM card has been dumping down gradually in order to help companies to gain more market share

In contrast the quality of the service has been increased annually Every company tries to improve its signal and expand its network system as much as possible Moreover, there are more functions in mobile phone such as download ring tone, logos, Short Message Service (SMS), and voice massages International callscan be conducted through using phone cardsor the internet service with very cheap rate comparing to common ways of phone calls The price charge for the internet service is also considerably cheaper as there are more and more ISPsentering into the industry such as LaoTel, LaneXang Internet and many Internet companies, which has official ISP licenses from The MPT (APT Regional Forum for ICT Experts in south-East Asia Jakarta, 4-5 February 2004) (BMI, 2012)

The telecoms industry in Laos is receptive to foreign investment With the exception of the Enterprise of Telecommunications Lao, the remaining three mobile operators are supported by foreign companies with telecoms knowledge However, according to BMI’s Risk Reward table, Laos is not as attractive as its regional peers and a significant part of its low score to be attributed to its low country risk score of 40.5

Laos' long-term political outlook depends heavily on how well the country balances between the need to spur economic growth to achieve its millennium

reliance on foreign aid and development assistance also means that the country's policies will remain susceptible to the political and economic interests of its much more powerful neighbours

Addressing corruption is expected to remain top of the government's agenda over the coming years The Lao PDR's decision to devote most of its attention and resources to achieving its Millennium Development Goals (MDGs)

For facilitating the sustainable development and ensure the success of IJVs in the important fields like the telecommunication industry in Laos, it is very essential to have better understanding of the current status of the IJVs’ performance and investigate the determinants of the IJVs’ success or failure

While focusing on the main objective of investigating the impact of several factors on performance of the IJVs in telecommunication industry in Laos, this study aims to answer the following questions:

1 What is the overall picture of business performance of IJVs in Lao’s telecommunication industry regarding different aspects of performance based on the theoretical framework?

2 What are the key factors influencing the performance of the IJVs in the telecommunication industry in Laos and what are the impacts of these factors

on the IJVs’ performance?

In terms of the research scope, the data collected for this study mainly from the three IJVs in the telecommunication industry in Laos In terms of timing, the collected data mainly cover recent three years (from 2010 to date) The analyses focus on several aspects of IJV’s performance and the factors influencing it The primary data mainly focus on the perspective from Lao’s partners in the IJVs

1.2 Theoretical Background

This study employs the theoretical background regarding IJVs performance and factors influencing their performance (e.g., Cao, 2012, Ren et al., 2009, Bener & Glaister, 2010) On the basis of literature review, performance

of IJVs has been assessed through some measurement variables, such as: survival, financial output, overall satisfaction, achievement of individual or joint goals, and learning (Dhanaraj & Beamish, 2004; Gaur & Lu, 2007; Lu & Xu, 2006; Meschi & Riccio, 2008; Ren et al., 2009; and Steensma & Lyles, 2000)

In addition, many previous studies have identified that IJVs performance has been influenced by many factors, including internal and external ones These factors include control of parent firms, trust, autonomy, national culture differences, corporate culture differences (Bener & Glaister, 2010; cf., Ren et al., 2009), commitment, bargaining power, justice, conflict, effectiveness of conflict resolution, cooperation, and goal compatibility (cf., Ren et al., 2009)

1.3 Research Methodology

In this study, both secondary data and primary data were collected to develop the three case studies in order to reflect IJVs’ performance and the factors influencing their performance during the time of the research

As this study mainly aims to analyze factors influencing FDI companies’ performance in the selected cases, multiple data collection methods were used to increase credibility and validity In this study, both secondary data and primary data are useful to answer the research questions

To serve the purpose of case study investigation, both qualitative and quantitative data were collected For each case study, the author first collected qualitative data, and then collected qualitative data The main purpose of collecting qualitative data is to explore and discover the relevant concepts and the interested relationships among them in the new context of Laos’ telecommunication industry Specifically, the concepts of IJV’s performance and

relationships between the factors and the IJVs’ performance were also examined The survey data were collected to provide empirical findings regarding the current status of the IJVs’ performance in the telecom industry in Laos and empirical evidence on the impact of some factors influencing the IJVs’ performance

Specific data collection methods used in this study include desk research (for collecting secondary data), observation, interviews (both face-to-face and by telephone), and survey (for collecting primary data)

1.4 Contribution of the Study

Theoretical contribution: As the global proliferation of IJVs continues and the economic health of firms and societies becomes ever more dependent upon the performance of these inter-organizational collaborations, the importance of improving the less than stellar performance rates of IJVs becomes accentuated It is obvious that better understanding of factors influencing IJVs performance is a means to improve these rates Therefore much more research attentionshould be put forth theory on and empirically examined such factors The past research have rarely addressed the issue in the context of developing countries, especially in Laos Therefore, the answers for the research questions raised in this dissertation have implications for the advancement of organization theory, strategic management, and enrich international business knowledge

The findings of this study also help to enrich the knowledge about IJVs by investigating simultaneously the key dimensions of IJV performance Specifically, all five performance dimensions were examined in the context of the telecommunication industry in Laos, including Survival and Longevity of the IJV, Financial Performance/financial output measures, Overall Satisfaction, IJV’s Goal Achievement, and Learning

This study also explored the main factors influencing IJV performance and empirically tested the impact of these factors in four regression models In

were employed This method was useful and necessary to obtain better understanding of the research issues

This dissertation also has the potential to benefit executives, managers, their firms, and policymakers If cooperation is to become part of the strategic repertoire of organizations and not just an operational convenience, then executives, strategists and policymakers must understand the key factors influencing IJV performance in telecommunication industry in Laos Specifically, by illuminating the host country legal environment, relationships between the local partners and foreign partners, and other factors that could affect IJV performance, this dissertation has the potential to provide insight that may benefit:

For Corporate executives and managers: by providing them with knowledge and insight that would improve their strategic partnering decisions, and in turn the IJV and firm performance Executives who better understand the dynamic roles played by institutional factors in partner selection, and the impact these factors have on IJV performance, would be better able to take advantage of the various opportunities that exist in the global arena

For IJVs: By providing knowledge that may serve to enhance their performance To adapt and perform effectively in a host country, firms must comprehend and appreciate those factors that affect their partner selection decision and venture’s performance For foreign partners, especially who are multiple national enterprises (MNEs), an understanding of how the host country’s legal environment influences top management’s concerns, its behaviors and IJV performance is central to decisions on entry and expansion Such an understanding would certainly enable foreign partners to improve their partnering success rate, and in turn to enhance firm performance

For Policymakers and trade organizations: By providing them with an understanding of international partnering policy makers may enable the construction of appropriate laws and regulations that better serve international

environment affects cross-national partnering activities would assist governmental entities in anticipating the probable impact of alternative policy options available to them Such anticipation may lead to the establishment of policies that facilitate free and open trade and investment In particular, such insight may promote the importance of transparency, stability and cooperation which would enable sustainable growth, equitable development and national stability

For Scholars and researchers: By providing the review of IJVs performance and the main factors influencing them in one of the developing countries like Laos, this dissertation could motivate future similar research in the context of other developing nations, especially in Asian area If researchers have the reference case study about one of typical nation in Asia, they could build up suitable analysis which help foreign companies make right decisions before investing in this area

1.5 Organization of the Study

The organization of this dissertation is based upon the objectives that it sets out to serve, and includes five chapters The first chapter is brief introductory chapter which is followed by Chapter 2 where readers can find the reviews of literature related to IJVs performance and the factors affecting it Chapter 2 also provides the conceptual framework which is used to explore the impact of several facfors on Laos’ IJV performance in the telecommunication sector The next chapter (Chapter 3) presents the research methodology which refers to the research approach, research design and specific methods used to collect data and analyze them in order to investigate the three cases, IJVs in Laos telecommunication industry Chapter 4 reports the main research findings in the context of Laos IJVs in the telecommunication industry The final chapter (Chapter 5) concludes the dissertation by providing a summary of the findings and a discussion of the research implications, an outline of the study’s

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL

FRAMEWORK

This chapter reviews the literature on IJVs’ performance and the factors influencing it In the first section of the chapter, the literature on IJVs’ performance is reviewed Specifically, the detailed reviews of five common measures of IJV performance were provided In the second section, the author reviews the key factors that are proposed to have significant impact on IJV performance Finally, the proposed conceptual framework is presented

2.1 Literature Review on International Joint Ventures’ Performance

The topic on international joint venture and its performance has attracted much research interest from many scholars and practitioners There have been numerous research examining IJVs since the first critique of the literature on international joint ventures (IJVs)of Yan and Zeng (1999) These studies have greatly enhanced our understanding of IJV operations (e.g., Cao, 2012; Hoang & Rothaermel, 2005; Isobe, Makino, & Montgomery, 2000; Luo, 2001; Tong, Reuer, & Peng, 2008)

Many researchers define IJVs as jointly owned organizational entities by two or more legally distinct organizations, in which the headquarters of at least one is located outside the country of operation of the entity, following Shenkar and Zeira (1992) Based on this definition, their view is specifically limited to equity IJVs In addition, they primarily focus on those studies that directly and empirically examined IJV performance, and some studies did not cover those ones whose dependent variable is not performance (e.g., IJV formation, employee commitment, employee turnover) Cao (2012, p 72) noted that although the term IJV has many different meanings, the most common definition

of IJV is “a separately legal business venture that involves two or more entities

with differentnationalities working together to achieve mutually agreed on business objectives” (Fogler & Reichert, 2002)

Despite extensive past research, the conceptualization of IJV performance and its determinants remains an often-debated issue in IJV research (Reus & Ritchie, 2004) IJV performance has been known as broad constructs with different dimensions such as survival, financial outputs (e.g., return on investment/ROI, return on equity/ROE, return on asset/ROA, and market share), overall satisfaction, achievement of individual or joint goals, and learning However, there has been considerable disagreement about the validity and reliability of these performance measures (Krishnan, Martin, & Noorderhaven, 2006)

In addition, even if researchers could agree on how to conceptualize and measure IJV performance, it is still difficult for them to be consentaneous about what drives performance Few researchers use the same constructs to investigate IJV performance Numerous but conflicting models have proliferated (e.g., Dhanaraj & Beamish, 2004; Gong, Shenkar, Luo, & Nyaw, 2005; Lu & Xu, 2006; Luo, 2002a, 2002b; Steensma & Lyles, 2000; Yan & Gray, 2001b; and Zeng & Chen, 2003)

Ren et al (2009) reviewedmany previousstudies on IJV performance published in 12 reputable journals in the field of management and international business The journals selected are a subset of those reported in DuBois and Reeb’s (2000) list of the top 30 international business journals and Pisani’s list of

20 influential management journals Their review suggested five common IJV performance measures that have been employed in the literature, including Survival, Financial Output Measures, Overall Satisfaction, IJV’s goal achievement, and Learning The five main measures of IJVs performance are presented in more details in the following

2.1.1 Survival and Longevity

It is noted that IJV’s performance reflects how partners of the IJV have been effectively working together (Nguyen, 2011) The number of years working together, therefore, should be an important signal of IJVs’ performance In literature, many previous studies have used Survival or Longevity as one indicator of IJV performance (e.g., Dhanaraj & Beamish, 2004; Gaur & Lu, 2007; Lu & Xu, 2006; Meschi & Riccio, 2008; Steensma & Lyles, 2000) The reason for using this indicator of IJV performance is that the longer the IJV survives, the more successful it is.An IJV is expected to be sustainable only as long as it represents the most efficient organization mode In other words,long time of survival is a sign of IJV success and termination is a sign of IJV failure (cf., Ren et al., 2009)

The above argument, however, may not betrue in all cases Rent et al (2009) argued that relying on only the information of IJV age, it is impossible to conclude that the 10-year IJV has a better performance than the 5-year IJV (see Lyles & Baird, 1994 also) The information of an IJV’s longevity although may beuseful information regarding the IJV’s performance this information could provide an insufficient basis for comparing its performance with other IJVs

On the other hand, it is also argued that using termination of the IJV as a measure of its failure may cope with some problems when concluding that all terminated IJVs are unsuccessful In practice, there are various reasons leading to

an IJV’stermination Even, an IJV termination may actually signal its success because IJVs may be terminated once participants have successfully accomplished their initial objectives (Gomes-Casseres, 1987; Kumar, 2005; cf., Ren et al., 2009) Therefore, in some cases, employingLongevity as a sign of failure would be inappropriate (Yan & Zeng, 1999)

In order to respond to the above potential of performance measure limitations when using Survival and Longevity as an indicator of IJV

performance, previous studies have shown effort to enhance the validity of this measure in different ways For example, this measure of Survival and Longevity can be used together with other measures such as sales growth (e.g., Lu & Xu, 2006), or investigate the motivation underlysing an IJV’s termination to see whether it was intended or unintended termination (Makino, et al.,2007; Reuer & Tong, 2005) If the reasons for termination is found out that is for growth and expansion opportunity, such termination can be considered as a success (Kumar, 2005; cf., Ren et al., 2009 as well)

In this study, Survival or Longevity are used together with other measures

to evaluate the IJVs’performance

2.1.2 Financial Output Measures

Among many indicators of IJVs’ performance, in the literature the researchers’ interest in employing financial output measures such as profitability measures (e.g., ROI, ROA) and market performance measures (e.g., market share) have been increasing (e.g., Lu & Xu, 2006; Luo, 2002a, 2002b, 2005, 2007a, 2008; Robins et al., 2002; Zhang et al., 2007; see Ren et al as well)

In the context of Vietnam, a developing country in Asia, IJV outcomes including financial ones are also considered to be useful to determine the success

or failure of an IJV (Cao, 2012) According to Cao (2012), when an IJV is operating well, its overall performance is assessed by IJV outcomes The most notable outcome measurements are considered to include profitability, growth, and market share (Kauser & Shaw, 2004) These financial measurements can help quantify IJV performance However, these measures have received criticim due to the unavailablility of the data and because in many cases it is very difficult

to access this kind of information from the interested organizations

Inspite of the problems associated with the financial output measures,

these objective measures of performance are still desirable (e.g., Luo, 2002a, 2002b, 2007a) Moreover, it is preferable when financial measures can be used together with subjective measures and it can help to validate the subjective performance measures In literature, high correlation between subjective (e,g., satisfaction with IJV performance) and objective performance measures (e.g., return on assets and return on sales) has been consistently found (e.g., Choi & Beamish, 2004; Isobe et al., 2000) Therefore, many previous studies have simultaneously employed both subjective and objective measures (e.g., Dhanaraj, Lyles, Steensma, & Tihanyi, 2004; Luo, 2001) Such integration can increase the measurement validity and makes the research results more robust In this study, the author decided to employ both objective and subjective measures of IJV performance

2.1.3 Overall Satisfaction

Many previous studies have used managers’ subjective evaluations of the IJV’s overall performance (e.g., Boateng & Glaigster, 2002; Cao, 2012; Demirbag & Mirza, 2000; Kwon, 2008; Li & Hambrick, 2005; Luo & Park, 2004; Nakos & Brouthers, 2008; Yeheskel, Zeira, Shenkar, & Newburry, 2001)

In this line, the IJVs’ performance has been measured based on the perception of how partners and the parent firm are satisfied with the IJV’s performance and how they are satisfied with the co-operation and partnership in the IJV

Although overall satisfactionhas been a commonly used performance measure for IJVs, several limitations associated with this measure are noted as follows

• According to Cao (2012), the levels of satisfaction on the part of all participating firms may be quite individualized because the local partners may concern more about some issues while the international partners may not really concern about these issues

• In terms of sampling issues, different respondents in the survey may perceive satisfaction differently These sampling differences may affect the validity of the measure of overall satisfaction (Ren et al., 2009) For instance, the criteria that a local partner uses to judge satisfaction may be different from those criteria used by a foreign partner Similarly, the criteria used by the IJV’s partners may be different from those used by the IJV’s parents

Past research has provided some suggestions to overcome the above limitations For instance, to avoide the limitation associated with sampling issues, researchers can use simultaneously different groups of respondents, including managers of both partners in the IJV and those in the parents companies (e.g., Dhanaraj et al., 2004; Fey & Beamish, 2001; Lane et al., 2001) In addition, overall satisfaction is a subjective measure Some previous studies have employed also other objective measures of performance such as financial outcomes (e.g., Cao, 2012)

2.1.4 Goal Achievement

In literature, achievement of individual and/or joint goals of an IJV has been used as a measure of the IJV performance (e.g., Phan et al., 2006; Lyles & Salk, 1996) It is noted that IJV’s goal achievement might be among the most commonly used performance measures (e.g., Fryxell, Dooley, & Vryza, 2002; Robson, Katsikeas, & Bello, 2008).Compared to other measures such as IJV survival, financial outcomes, and IJV overall satisfaction, achievement of individual or joint goals can be measured from each of the partner firm’s perspectives and also from IJV as a whole’s perspective

This measure is important because it is assumed that the partners of an IJV join the IJV to achieve their strategic goals by complementing each other’s

needs Therefore, in order to accurately and comprehensively capture performance of the IJV, the other mentioned performance measures should be supplemented by Goal Achievement (Ren et al., 2009) For instance, if the main goal of an IJV is to transfer technology, other firm performance measures like survival may not accurately reflect the IJV’s performance

Similar to other performance measures, Goal achievement has also received some criticism such as the IJV parents and the partners may place the importance on the goals at different levels This, therefore, can lead to different perceptions of the IJV performance due to differentstrategic goals of parents and partners To overcome the limitation associated with this measure,researchers can examineperceptions from different perspectives (i.e., perceptions of the managers from the parent firms as well as those of the IJV) (e.g., Gong et al., 2005, 2007; Luo, 2008; Ng et al., 2007; Zollo et al., 2002) Researchers also can measure perceptions of achievement of overall goal and specific goals at the IJV (e.g., Krishnan & colleagues, 2006)

2.1.5 Learning

In literature, learning from partners in IJVs has received significant attention and has been considered as an important indicator for the success of an IJV (Phan et al., 2006; Lyles & Salk, 1996) From the knowledge-based perspective, the transfer of knowledge and skills (e.g., technology, marketing, management skills, and cultural knowledge, etc.) from the parents to the IJV is critically important for the success of the IJV (e.g., Dhanaraj et al., 2004; Lane at al., 2001; Zollo et al., 2002; and Tsang, 2002)

Similar to other performance measures, there are some concerns regarding using Learning as an IJV performance measure as follows:

• Learning is a subjective measure Different respondents in the IJV may perceive their learning at different levels

• Learning tends to be a subordinate goal in IJVs (e.g., Gong et al., 2007; see Ren et al., 2009 also) Therefore,there has been a question whether partners’ learning itself is equivalent to the IJV performance

To oversome the above limitations, using this measure together with other performance measure could be a better combination that can provide more comprehensive picture of how an IJV performs

In summary, the literature on IJV has suggested various measures to evaluate IJV performance However, in addition to the strengths, each measure is often associated with some limitation It is suggested that the safest approach for studying IJV performance may be to compensate for each measure (Ren et al., 2009) For instance, it is desirable to use simultaneouslyboth subjective and objective measures In addition, to get more comprehensive picture of the IJV’s performance,it would be good to use different groups of respondents in the IJV, including managers of the IJV and parent firms

In this study, the author employed all the five key dimensions of IJV performance when investigating the IJVs’ performance in the telecommunication industry in Laos to have a better understanding of the current status of the IJVs’ performance When examining the impact of some factors on the IJVs’ performance, all the measures of performance were also considered and most of them were treated as dependent variables in the regression models

2.2 Literature Review on Factors Influencing IJVs’ Performance

In the literature on IJVs,investigation into factors contributing to IJV performance have been received much interest from the scholars and practitioners (Cao, 2012; Rod, 2009) After reviewing past research in the field, Rod (2009) has summarized the factors that are treated as independent variables influencing IJV’s performance, and classified them into two main groups, each

factor of which may have direct of indirect impact on joint venture performance These factor groups refer to ‘partner compatibility’ (e.g., organizational culture, management/leadership style, strategic match, communication styles, trust, commitment, and propensity to cooperate), and ‘Socio-Economic factors’ (e.g., opportunity costs, relative bargaining power, governance/control over JV, and perceived opportunism)

It has been noted that the above-mentioned factors may have interact and

it poses some challenges for researchers in developing a suitable conceptual framework for analyzing the impact of factors influencing joint ventures’ performance (Rod, 2009) In previous studies, some research focused on investigating several key variables as factors affecting IJVs’ performance (e.g., Phan et al., 2006), while some just focused on only one key factor (e.g., Cao, 2012)

In the context of developed countries, it has been suggested that the success of IJVs may be a function of a number of factors Bener & Glaister (2010) suggested five main factors influencing IJV performance that have been given significant attention in the literature as determinants of joint venture performance These factors include parent control (Killing, 1983; Lu & Hebert, 2005), JV autonomy (Hill & Hellriegel, 1994; Lyles & Reger, 1993; Newburry & Zeira, 1999; Zeira & Parker, 1995), trust between partners (Madhok, 1995), national culture differences (Brown et al., 1989; Hennart & Zeng, 2002; Shenkar

& Zeira, 1992), and corporate culture differences (Pothukuchi et al., 2002; Sirmon & Lane, 2004; Weber et al., 1996)

Besides, based on the review of 54 previous studies in IJV literature, Ren

et al (2009) showed the model of 10 determinants which affect IJVs performance in almost cases of developed and developing countries Despite being investigated by numerous scholars with different approaches and models,

in this study, I am interested inexploring the impact of five main factors that have been consistently identified as being important determinants to IJV

performance and they are also relevant to the context of Laos Each factor will

be discussed in more details in the following sections

2.2.1 Control of the IJV

Control is considered as one of the key factors associated with the initial development of an IJV Geringer and Hebert (1989) define control asthe process

by which one entity influences, to varying degrees, the behavior and output of another entity through the use of power, authority and a wide range of bureaucratic, cultural and informal mechanisms In their study, control is suggested to have strong impact on IJVs’ performance

Similarly, the significant influence of the control process has been much examined in previous studies In the context of Western Europe,Groot and Merchant (2000) suggest the important role of control in helping the partners’ meet their objectives if it is proper, but that may lead to IJVs’ termination and failure if the control is improper In line with this, in the context of developing countries like China and Vietnam, control mechanisms was also found to have significant affect on performance and organizational change (Cao, 2012; Yan & Child, 2004, and Yu & Ming, 2008) For instance, a recent study by Cao (2012) has investigated the predictor for the success of Vietnamese IJVs Identifying and selecting appropriate and effective control mechanism was found to be primary determinant of a successful IJV in Vietnam

In IJV literature, many studies also concern about the ability of IJV parent companies to control IJVs in a manner that can lead to good performance (e.g., Barkema et al., 1997; Geringer and Hebert, 1989; Yan, 2000) Dominant control of the IJV by one parent is considered to contribute to superior performance of the IJV There are some explanations for this including that joint ventures having dominant control by one partner would be more successful because it would be easier to manage the IJV (Killing, 1983) In

addition, control offers an ability to determine the most effective use of the strategic resources that a parent company shares with an IJV Thanks to that, this can contribute to IJV’s better performance (Mjoen & Tallman, 1997) Furthermore, it is suggested thatwhen a parent company control over some or all of an IJV’s activities it can help protect the company from the risk of prematurely exposing its technological or other proprietary assets to other partners (Geringer & Hebert, 1989) In line with this, it is argued that the threat

of an initially weaker IJV partner gaining a future competitive advantage through a superior ability to learn from collaboration also increases the need to control activities and information flows in the IJV (Hamel, 1991; Makhija and Ganesh, 1997)

Inspite of much effort of investigating the influence of the control or ownership structure on IJVs’ performance, previous findings seem to be inconsistent with regard to the control structure-performance link (cf., Ren et al., 2009) In this study, the author is interested in exploring how control structure affect performance of the IJVs in telecommunication industry in Laos This study also seeks for empirical evidence on the impact of control mechanism on the IJVs’ performance

2.2.2 Trust

Trust refers to the willingness of a party to rely on another party’s actions in a situation involving risk and uncertainty (Mayer et al., 1995; cf., Ren et al., 2009 also) In the IJV literature, trust between partners is suggested

to be an important factor that
contributes to the better performance of IJVs (e.g., Currall & Inkpen, 2002; Inkpen & Currall, 2004;
Madhok, 2006; Ng et al., 2007; Robson et al., 2008)

It has been suggested that trust between IJV’s partners can bring many benefits such asthe stability, stronger IJV relationships, potential for learning,

and better
performance of IJVs (Nguyen, 2011; Parkhe, 1993; Smith et al., 1995; Styles & Hersch, 2005) Previous studies have examined both direct and indirect impact of trust on IJVs’ performance (cf., Ren et al., 2009) However, a direct, positive link from trust to JV performance is widely suggested in literature

It is noted that trust is a multilevel construct Trustcan be examined at the interpersonal, intergroup, organizational, and interorganizational levels (Ren et al., 2009).At the interorganizational level, trust may lead to better performance through reducing negotiation costs and conflicts or by allowing various bilateral governance mechanisms (Zaheer et al., 1998) When trust is developed between the partners, it permits open communication, shared understanding, and thus better cooperation between the partners The partners also are more likely to commit the resources necessary for an alliance’s success High level of trust between partners is often considered to be a factor thatencourages high level of knowledge exchange and better level of commitment of continue supporting IJV operations from partners (Dhanaraj et al., 2004; Nguyen, 2011; Wilson & Brennan, 2009) In addition, it is noticed that high level of trust between partners can have positive effect to eliminate conflicts and also make conflict more easily to resolve (Nguyen, 2011) Furthermore, building successful relationship between the partners and gaining trust in each otherwill make the parties feel secured about positive outcomes and this can lead to higher level of satisfaction (Andaleeb, 1995)

Inspite of common acceptance of critical role of trust in the success of IJVs (Fryxell et al., 2002), trust may have different effects on performance depending on the internal and environmental factors with which it interacts Zaheer & Zaheer (2006) have developed a model suggesting that collaborative partners from different countries are likely to bring either symmetric or asymmetric conceptions of trust to a business relationship Therefore, the impact of trust on firm performance is not always a direct relationship, but it

may be moderated by some contextual factors

Trust and its important role has been examined in both developed and developing countries Lin and Wang (2007) examined three samples of managers – Chinese, Western and Asian – in China-based JVs, and trust was found to be positively associated with IJV satisfaction across all three samples

Trust has been considered to help achieve the objectives of both the parent companies in an IJV (Yan & Gray, 1994, 1996) Trust is also found to be ranked first among the factors leading to successful joint ventures in a study of Chinese and US middle-level managers (Baird et al., 1990) Yan & Gray (1994) also note that trust can modify the influence of dominant partner control on the performance of an IJV In a study by Li et al (2006), trust is also found to be important for enhancing IJV performance.Similarly, Wang & Nicholas (2005) suggested that process-based trust has impact on the performance of contractual joint ventures Thus, trust can be regarded as one of the key determinants that helpsuccessfully achieve the IJV objectives

In the context of Vietnam, an emerging country, Nguyen (2005) developed an integrative model of trust dynamics to see how trust between firms evolves over time, and tested the model in Vietnam The author used a combination of different research methods to capture the complexity of trust dynamics Based on the insights of the field research, a surveywas conducted with a sample of Vietnamese private companies to test the model The research results consistently support the proposed dimensions of trust

2.2 3 Cooperation and Commitment

According to Buckley & Casson (1988), cooperation refers to a process

of mutual forbearance in the allocation of resources that one party is made better off and no one is worse off than it would otherwise be In literarture, cooperation is consistently suggested to have a positive impact on IJV

performance (e.g., Phan et al., 2006; Demirbag & Mirza, 2000; Luo & Park, 2004; Zhan & Luo, 2008) For instance, the empirical findings from Gong et al (2007) have showed the positive impact of cooperation on partners’ satisfaction with IJV performance In line with this, Luo (2002b) also found a positive relationship between cooperation and IJV financial outcomes

With regard to Commitment, according to Ren et al (2009), commitment reflects a partner’s positive valuation of a collaborative relationship Commitment can be described as the willingness of IJV partners to exert effort

on behalf of the IJV relationship (Mohr & Spekman, 1994; see Ren at al., 2009 also) Many previous studies have examined the impact of commitment on IJV performance, and the empirical findings have supported a positive relationship between the two (e.g., Demirbag & Mirza, 2000; Glaister & Buckley, 1999; Isobe et al., 2000; Kwon, 2008; Nakos & Brouthers, 2008; Robins et al., 2002)

In literature, commitment has been noted as an important factor influencing IJVs’ performance Specifically, commitment from partners is considered to be essential for IJVs longevity (Das & Teng, 1998; see Nguyen,

2011 also) Committed partners often consider long term gains rather than short term benefits They tend to keep good relationship with partners, and therefore they can show the effort to avoid conflicts and try to solve the conflicts if occurred (Nguyen, 2011; Ozorhon et al., 2008; Ross, 2009), then can enhance the partners’ satisfaction In addition, commitment can reduce transaction costs and the costs associated with partnership, thereby enhancing performance (Ren

et al., 2009) A study by Nakos and Browthers (2008) has demonstrated that the parent’s long-term orientation or commitment toward IJV is positively related

to the parent’s perceived profit of the IJV.Tsang (2002) also found a positive relationship between the parent’s overseeing effort and attention to the IJV and management involvement with the parent’s knowledge acquisition Phan et al (2006) suggested the positive relationship between knowledge acquisition and IJV’s performance

It has been noted thatcommitment can be both psychological and behavioral Partners with high commitment need to express their long-term interest in the relationship and also need to take affirmative actions to demonstrate their willingness to act on their promise One form of behavioral commitment involves commitment of resources to the IJVs such as commitment to transfer technology, commitment in terms of capital investment, new facilities, and operational inputs (e.g., Child & Yan, 2003; Cullen et al., 1995; Isobe & colleagues, 2000; cf., Ren et al., 2009) Past research has showed that the quality of resource commitment haspositive impact on the perceived economic growth of IJVs (Ren et al., 2009)

In addition,it is noted that the more a partner devotes resources to the IJV, the more this partner’s fate is bound to the IJV.This can lead to greater psychological commitment If a partner considers the IJV as strategically important, it will be more willing to contribute resources to it This, in turn will contribute to the success of the IJV (cf Demirbag & Mirza, 2000; Ren et al., 2009) Therefore, in order to gain comprehensive understanding of the impact

of commitment, it is important to consider both the psychological and the behavioral aspects simultaneously when studying this construct

Based on the discussion above, it seems that cooperation and commitment share some variance It is in line with the findings from the author’s qualitative study Therefore, in this research, the author treated cooperation and commitment as a variable in the research model for empirical testing

2.2.4 National Culture and Corporate Culture Differences

It has been suggested that culture is one of the most important determinants of IJV performance (Lu, 2006) It also suggetsted thatresearch

on cultural differences of IJVs should examine both the national and the

organizational cultures of the IJV’s parent firms since organizations are embedded in the larger societies in which they operate (Sirmon & Lane, 2004)

With regard to the impact of national cultural differences, the extant literature provides some mix findings (Brouthers &Brouthers, 2001; cf., Ren et al., 2009 also) In many previous studies, national cultural differences have been found to have negative impact on IJV performance Differences in national culture is considered tolead to misunderstandings in negotiation processes and ambiguity about parents’ goals within IJVs (Simonin, 1999), negative perceived performance, and to increasing IJV instability (Makino et al., 2007)

It is noted that one of the barriers to manage IJVs is the cultural differences between IJV partners.Hofstede and Hofstede (2005) have suggested that individuals living in a particular country tend to share similar values, and that they bring these values to the firms where they work Thus, a firm’s values largely reflect its national culture Therefore, IJV partners based in different countries will tend to have different values These value differences may challenge IJV partners to get agreement in setting common goals, solving the problems, and resolve the conflicts.The findings from Li et al (2011) confirm the important role of national culture in foreign JV’s financial decisions The cultural distance can also creat various difficulties in IJVs in terms of communication and negotiation that can negatively affect IJV performance (Phan et al., 2006)

A study bySirmon and Lane (2004) also suggetsed that cultural distance stemming from national cultures inhibit employees’ ability of the IJV partners

to interact effectively As national culture influences behavior and management systems, it thus has the potential to destabilize IJVs Some other researchers found that differences in national culture caused conflicts and barriers (Lane &

Beamish, 1990; Sim & Ali, 2000) Somecommon negative effects of cultural distance on IJV performance have been suggested including (1) Cultural distance can lead to communication problems, which may hinder knowledge exchange and inter-organizational learning; (2) It can cause managerial conflicts due to misunderstandings, which may lead to additional costs; (3) It can influence partner firm approaches to conflict resolution, which may adversely impact operations; and (4) It can erode applicability of certain partner competencies, which may decrease the potential benefits from cooperation(Nielsen 2002; Park & Ungson, 1997; Parkhe, 1991)

However, literature also provides evidence to suggest that differences in national culture can be beneficial Some findings from previous studiessuggested that differences in national culture were a source of admiration and challenge, leading to a higher level of communication and more sustained collaboration (Luo et al., 2001; Park & Ungson, 1997; Shenkar & Zeira, 1992) The findings from the studies by Barkema and Vermeulen (1997), and Barkema et al (1997) also supported the positive relationship between the differences in national culture and IJV survival These past findings suggest that sometimesincreased differences in
national culture can lead to higher IJV performance

In addition, some previous findings showed no significant relation between distance in national culture and IJV performance (e.g., Beamish, 1985; Fey & Beamish, 2001; Glaister &Buckley, 1999; Tihanyi et al., 2005) Also, the study by Franko (1971) found little impact of dissimilarities in national cultures

on the stability of IJVs

Although the prior research has produced ambiguous findings relating to the influence of national cultural distance on performance, in order to provide a further test, this study examines the negative effect of cultural distance on IJV performance that has been widely suggested in the literature

Corporate culture differences

At organizational level, according to Schein(1992)corporate culture refers to a pattern of shared basic assumptions about the environment, human nature, social relationships, and reality that employees have learned when they address and resolve problems of external adaptation and internal integration As mentioned above, organizations,in many ways,are embedded in the larger society in which they operate Therefore, research on cultural differences of cross-national businesses should examine both national and corporate cultures

According to Ren et al (2009), organizational culture distance captures differences in a firm’s ongoing organizational practices and operations These differences can have negative influence on IJV performance (Brown et al., 1989; Ren et al., 2009; Sirmon & Lane, 2004)

It has been suggested that differences in corporate culture differentiate IJV partners based on their management practices, which are deemed essential for the functioning of their respective organizations When organizations in an IJV differ in their practices, these differences may result in conflicting behaviors, lead to misunderstandings and cause communication problems Partners with diferent corporate cultures may spend mỏe time and effort to establish mutually agreeable managerial practices and routines to facilitate interaction, and may incur higher costs and cause more mistrust than partners with similar corporate cultures (Park & Ungson, 1997)

In literature, it is also noted the interaction between national culture and organizational culture differences (cf., Ren et al., 2009) A study by Pothukuchi

et al (2002) found that the presumed negative effect from partner dissimilarity

on IJV performance originates more from differences in organizational culture than differences in national culture Sirmon and Lane (2004) argued that differences in national culture increase partners’ organizational culture differences In this study, the impact of differences in both national culture and

corporate culture were examined and tested in the research model

2.2.5 Goal Compatibility

To be successful, it has been suggested that joint ventures need to reflect the shared goals and objectives of their parent companies (cf., Rod, 2009) For IJVs, goals refer to the IJV parent’s specific objectives and expectations in establishing the IJV, and goal compatibility refers to the extent to which foreign and local parents have similar strategic objectives and share the direction of the IJV (Ren et al., 2009)

The findings from many previous studies have suggested a positive relationship between goal similarity and perceived IJV performance (e.g., Boateng & Glaister, 2002;Kogut, 1988; Yeheskel et al., 2001) It is argued thatgoal compatibilitycan help to reduce uncertainty about the other party’s behaviors and lead to personal attachment in IJVs, and thereby enhancing trust among partners (Luo, 2001) Otherwise, incompatibility in goals is likely to generates conflict in IJVs (Luo, 2001)

It is noted that parents’ goal compatibility may influence partners’ satisfaction through affecting relationship quality between partners However,

in addition to this indirect effect, goal characteristics may also directly affect survival (Luo, 2002c), a dimension of IJV performance In this study, goal compatibility was treated as a predictor for all five dimensions of IJV performance in the research model

The above section presents briefly five main factors which have widely investigated in the literature In addition to these factors, previous studies in IJV field have also examined some other factors such as Autonomy or independence, Bargaining power among parent companies (e.g., Yan & Gray,

2001a, 2001b), organizational Justice (Choi & Chen, 2007; Luo, 2008), Conflict and Effectiveness of Conflict Resolution (Demirbag & Mirza, 2000; Steensma & Lyles, 2000; Yan & Gray, 2001a) as predictors of IJVs’ performance In this study, the author focuses on exploring the five mentined factors on various aspects of the IJVs’ performance in Laos’ telecommunication industry However, the other potential influencing factors have also been explored at a certain level in the qualitative study when appropriate Based on the literature review, the conceptual framework for this study is presented in the following section

2.3 Conceptual Framework

Doing research on IJVs’ performance and factors influencing their performance has attracted attention from a numerous scholars but they are mainly focus on the context of developed countries or some specific fields in developing countries Moreover, there is no consensus on an appropriate conceptualization and measurement of IJV performance (Chowdhury, 1992) In particular, some scholars have focused on the IJV as an independent entity and used IJV survival or financial output as the ultimate performance indicators In contrast, other researchers have used the parents’ perspectives to measure IJV performance, thus focusing on parent firms’ satisfaction or the extent to which the IJV achieves parent firms’ goals Ren et al (2009) identified five common important measurements of IJV performance based on their review of past research, and compared their relative usefulness for future IJV research Besides, Bener & Glaister (2010) presented 15 performance dimensions used to examine the performance of Western IJVs

On the basis of literature review (e.g., Cao, 2012; Lyles & Barden, 2000;Lyles & Salk, 1996; cf., Ren et al., 2009 also) and suggestions fromthe interviews with the three IJVs’ managers, fivemeasures/dimensionsof IJV

performance are seleted to use in this study The five performance measures are

as follows:

1 Survival or longevity,

2 Financial performance, including: Sales growth; Market share; target profit; Return on investment (ROI); Return on equity (ROE); Return on assets (ROA),

3 Overall satisfaction,

4 Goal achievement, and

5 Learning

Regarding factors influencing IJV performance, each research focused

on specific factors Most of them examined the factors in the context of developed countries (e.g., Bener & Glaister, 2010; Ren et al., 2009) In the context of developing countries, Nguyen (2005) used model of trust while Phan

et al (2006) examined the effect of knowledge acquisition from foreign parents

in IJV performance in the context of Vietnam Therefore, in order to figure out the factors influencing performance of IJVs in Laos’ telecommunication industry, we based on previous research including the model of Ren et al (2009), Rod (2009) while taken suggestions from the qualitative study into account Specifically, five factors were selected, including: Cooperation and Commitment, Trust, Control Mechanism, Culture Differences (national and

corporate culture), and Goal Compatibility This study aims to explore these

factors’ impact on performance of the IJVs in the telecommunication industry

in Laos for all performance dimensions The research model for this study is presented in Figure 1