How long will the marriage of Sino-Foreign JVs in China last? A theoretical and empirical investigation

• Game theory used to show strategic interaction and long-term orientation of players in international joint ventures (IJV).
• Game theory has predictive power for the empirical analysis of the duration of Chinese-US//EU IJVs, and Chinese-Japanese/South Korean IJVs.
• The longevity of IJVs in China is affected by senior management control.
• The knowledge access to the Chinese parent is also a crucial factor for the longevity.

This paper studies the factors affecting the longevity of international joint ventures (IJVs) in China and investigates the strategic interactions of the players in an IJV (foreign parent, local parent and IJV management) by adopting game theory and using empirical analysis based on national perceptions of time horizons. The theoretical part shows equilibria for the games played by the parents. The empirical evidence, based on a sample of Chinese-US and EU IJVs, as well as Chinese-Japanese and South Korean IJVs, is consistent with the propositions derived from our theoretical models. Our empirical findings show that the longevity of an IJV is affected by senior management control. Access to local knowledge is also a crucial factor affecting longevity. Furthermore, the degree of long-term orientation (LTO) of the parents influences the longevity of Sino-Foreign IJVs. The contributions made by both foreign and local parent firms are also found to influence the longevity.