Use of formal and informal control mechanisms in international joint ventures : Australian and Indian joint venture partnerships

Abstract

How can Australian international marketers and managers ensure control over their joint venture operations in emerging markets? Does control evolve? What are some of the implications of alternate control mechanisms? These are some of the questions that the current study addresses. This study investigates the area of international joint venture (IJV) control in the developed Australian and the emerging Indian market place. In doing so, it replicates and refines previous researchers’ conceptualisation of IJV control and extends their framework to include an examination of the dynamic nature and interaction of control between local and foreign partner firms. A qualitative, cross-case research methodology was employed to analyse the mechanisms through which control is exerted. Two in-depth case studies were conducted with flourishing Australian and Indian joint venture partner firms in order to provide a deeper understanding of how control 1 operates within dissimilar business and cultural environments. The case study results indicated the use of multiple control mechanisms within the joint ventures and provided detail as to how each mechanism exerted control. Further, the results illustrate the evolving nature of international joint venture control and identified two types of international joint ventures, Technology-based (Type 1) and Market knowledge, Distribution-based (Type 2) IJV’s. From the cross-case study results it can be inferred that international marketers operating within IJV’s need to employ control mechanisms that have a value-adding, future orientation in order to enhance mutual benefits.