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Social Dilemma of Joint Ventures:A New Explanation of Transaction Cost Theory and Empirical Test |
XUE Jinjie,SHI Benshan |
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Abstract For joint venture management, a primary challenge is how to settle a social dilemma, which manifests itself in the sense that joint venture partners would encounter a conflict between maximizing their own interests only (opportunism) and maximizing the interests of the whole alliance. And social dilemma management capability directly affects joint ventures' effective operation. This paper made a comprehensive explanation to the cause and mechanism of the Social Dilemma of Joint Ventures from the perspective of transaction cost theory. In particular, the three components (i.e., partner selection cost, asset specificity and extorting rent cost)constructing cost of joint ventures are defined and conceptualized in this paper. Based on empirical evidence on a survey of 226 Chinese manufacturing enterprises, this study demonstrates that all the three costs are positively related to cooperation among joint venture partners. Particularly, partner selection cost exerts the most significant influence on joint venture partner's cooperation. The results also reveal that opportunistic behavior is significantly affected by extorting rent cost and cooperation. The finding shows that conducting sufficient partner selection increases the probability of specific asset investment.
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Received: 24 November 2015
Published: 15 March 2016
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Corresponding Authors:
XUE Jinjie
E-mail: jinjin.412@163.com
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