Equity sharing in international joint ventures: an empirical analysis of strategic and environmental determinants

Equity sharing in international joint ventures (IJVs) is a critical issue with implications for risk sharing, resource allocation, knowledge commitment, and organizational control. As a departure from previous research, this study aims to explore strategic antecedents and environmental dimensions underlying sharing arrangements. It argues that the structure of equity sharing controls the ex post degree of economic exposure or risk propensity, and boosts risk-adjusted returns earned from strategic resources or global integration. Analysis of data collected from IJVs in China suggests that strategic orientation, resource dependence, knowledge protection, and global integration as sought by MNEs are important antecedents of equity sharing. Equity sharing is an inverse function of host-country environmental complexity and hostility as perceived by MNE managers.