Vol. 6 Num. 1 - GCG: Revista de Globalización, Competitividad y ...

241. IntroductionI study the determinants of the success of international joint ventures (IJVs) among developingcountry multinational companies (DMNCs). Although there is a large literatureanalyzing IJVs (see reviews in Inkpen and Beamish, 1997; Parkhe, 1993; Reus and Rottig,2009; Salk and Lyles, 2007), most of it has focused on studying IJVs with one partnercoming from an advanced economy, the local partner being in a developing country, andboth operating in the same industry. In this type of alliances, the implicit assumption isthat the local partner provides the knowledge on how to navigate the challenging developingcountry conditions and gains expertise in technology, while the foreign partnerprovides the technological expertise and gains knowledge on how to operate in the developingcountry. This specialization in roles of partners operating in the same industryand the potential of strengthening a competitor, be it the foreign firm gaining a footholdin the developing country or the local firm upgrading its technology, has led researchersto caution about IJVs and the transfer of capabilities to competitors.However, in contrast to these studies I focus on analyzing IJVs among developing countryfirms. These challenge the implicit assumption of the specialization of partners sinceneither partner may be at the technological frontier or lack knowledge on how to operatein developing countries. To gain a better understanding I study the case of the IJV betweenthe Mexican conglomerate Salinas and the Chinese automaker FAW for the creationof a car assembly operation in Mexico in 2007. Although the IJV collapsed by 2009, itreveals several interesting ideas regarding the success of IJVs in general and IJVs amongdeveloping countries in particular. First, the case reveals a different logic of specializationsince the two companies were operating in different industries and thus the fear of creatinga competitor was not present. Instead, the two companies were truly specialized,one in the industry and technology and the other in the market access and navigation ofinstitutional conditions. Thus, this created the opportunity for a deep collaboration andreduced the fear of helping a competitor. Second, external events led to the failure of theIJV as the partners could not solve the challenge of being developing country multinationals;the recession of 2008 and the perceived lower quality of cars created by developingcountry firms limited their ability to sell.The paper thus contributes to the literature by providing a better understanding of someof the unique challenges that IJVs among developing country firms face that were littlediscussed in the literature before. In so doing, it identifies one implicit theoretical assumptionof IJV studies: the tension between collaborating for mutual gain and the competitionamong firms operating in the same industry.The paper is also useful for managers of developing country firms. It helps them betterunderstand the benefits and challenges of establishing IJVs with other developing countryfirms. It encourages the specialization of the firms into market or technology to avoidthe challenges of helping a competitor, but at the same time cautions about the challengesof undertaking IJVs with other developing country firms since these IJVs, althoughstrategic and potentially profitable, suffer from the perception of lower quality of productsgenerated by developing country firms.Key wordsAlliances,International jointventures,Developingcountrymultinationals,Emerging markets,China, Mexico,FailurePalabras claveAlianzas,joint venturesinternacionales,multinacionalesde países en víasde desarrollo,mercadosemergentes, China,Méjico, fracasoPalavras-chaveAlianças,Joint venturesinternacionais,Multinacionaisde países emdesenvolvimento,Mercadosemergentes, China,México, FalhaJEL CodesM16; F23GCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 23-35