Article Analysis



Article Analysis

Article 1

Vermeulen & Barkema (1997) in their paper are looking to pinpoint key differences that may exist in the culture related background of partners, who are looking to form international joint enterprise. The aim is to assess these backgrounds and highlight the key factors that are detrimental to the association. The authors argue that international joint venture (IJV) is arguably one of the best methods to enter any foreign market. This is because forming an IJV has many advantages, especially when comparing the benefits and advantages of entering a foreign market through a wholly owned subsidiary (WOS). The authors are quick to point out that IJV facilitates partners to share costs as well as use local partner and their information base to extract benefits with regards to business practices, local consumer tastes and institutional framework. The authors then shift the content of the article towards the primary objectives of the paper. Vermeulen & Barkema (1997) describes some of the risks of forming an IJV. IJVs are often prone to potential problems between the partners in collaboration. Cultural differences are often at the forefront of creating such threatening problems. This is because these differences generate ambiguity between the partners. This ambiguity gives birth to conflict and threaten close down of the enterprise. The study by the authors extends on the theory and research of Hofstede's (1980, 1991). The mentioned literature allows a comparison between various cultures quantifiably. This way the theory is able to address the respects in which cultures differ.

The authors put forth five hypothesis and aim to address the posited question through research and statistics. Following is the essence of these five questions, the authors are exploring, and these are:

IJV survival is most prominently negatively affected by difference in uncertainty avoidance between host and home country.

IJV survival is most prominently negatively affected by difference in long term orientation between host and home country;

IJV set up is more threatened than IWOS by difference in uncertainty avoidance between host and home country;

IJV set up is more threatened than IWOS by difference in long term orientation between host and home country;

Cultural distance has a lot of impact on IJV survival, as such this hypothesis essentially tests on the relevance of the Hofstede's dimensions (1980, 1991).

Vermeulen & Barkema (1997) determined that contrasts in the cultural foundations of partner's reason problems in IJVs however, as this study reveals to; a few contrasts and dissimilarities are more disruptive than others. Contrasts in long-term and uncertainty avoidance specifically, cause problems. These distinctions have a negative effect on IJV survival and diminish the probability that firms enter a remote nation through an IJV as opposed to through an IWOS. Clearly, these distinctions, which make as distinctions in how IJV partners recognize and adjust to chances and threats in their surroundings are more challenging to resolution than contrasts along the other three measurements. Maybe cultural distinctions noticing masculinity, individualism and power distance are all the more effortlessly determined on the grounds that they are predominantly reflected ...