The Influence of Institutional Forces on International Joint Ventures’ Foreign Parents’ Opportunism and Relationship Extendedness

Abstract

Institutional forces influence the formation of international joint ventures (IJVs) in emerging economies and shape both their parents’ behaviors and their marketing strategies. Whereas previous research has centered on governance mechanisms that deter opportunism, this study investigates the influence of institutional forces (i.e., rule of law, government intervention, and dysfunctional competition) on the IJV's foreign parent's opportunism. The authors find that rule of law and dysfunctional competition curtail opportunism, whereas government intervention drives opportunism. In addition, relationships between institutional forces in local markets and the IJV's foreign parent's opportunism depend on the IJV's marketing capability. The authors further examine the influence of the foreign parent's opportunism on IJV relationship extendedness and find support for a negative relationship between opportunism and the IJV's continuity. This study enriches institutional theory and identifies the boundary of the influence of institutional forces on opportunism. Because opportunism is a critical relationship hazard, the findings of this study have important implications for IJVs’ partnership management.