Joint Ventures success in International market: How emerging-market firms improve value in developed-market firms

Strategic alliances, joint ventures (JVs), and other cooperation agreements between firms operating in developing countries and those in emerging countries, represent a privileged instrument for accessing in the foreign market and for activating greater competitiveness of companies in the worldwide markets. For many years, strategic alliances have seen firms operating in developed-markets as their main subject. Lately, emerging economies are increasingly involved in JV operations as buyers: all these have occurred as a consequence of the phenomenon of globalization, and the drive towards liberalization processes. The paper analyzes the reaction of 120 firms listed on the stock market in developed countries in response to joint venture announcements of emerging-market partners, in order to understand whether JV processes are drivers for value creation. Other determinants of value creation are also explored by multivariate regressions, including a battery of covariates related to industry-wide, countrywide, and firm-specific factors. The results express a positive and significant reaction to the market in response to the announcements of international JV. In our case, we see that the exogenous shock of emerging-market liberalization has a positive impact on the stability of international JVs in developed-markets; in addition, international JVs show a high complementarity of partner resources, which are able to alleviate some of the stability problems.