Trust, Capability, and Management Control in International Joint Ventures in Korea: A Dynamic Perspective

This study investigates what causes the change in the existing division of management control between joint venture partners. The change in the existing division of management control is theorized as the result of a shift in the existing bargaining power balance between the joint venture partners. To capture the change in the amount of the joint venture partners' bargaining power, we measure the joint venture partners capability change. Trust is also examined as an antecedent of the joint venture partners' capability change. So the link "trust -> capability change -> control change" is examined using data collected through interviews with 51 international joint ventures in Korea. The hypothesis that the trust established between foreign and Korean partners leads to changes in the both partners' capabilities has received support in the empirical test. The hypothesis that the capability change of foreign and Korean partners, in turn, leads to the change (or increase/decrease) in the extent of parent control exercised over the JV's management has also received support.