Partners’ diversity and joint venture termination: The effect of business unrelatedness, size imbalance, and country experience asymmetry

The objective of this paper is to analyse the relationship between partners’ diversity and the likelihood of international joint venture termination. Building on bargaining power theory, we unbundle partners’ diversity into the three facets of variety, balance and disparity, captured by business unrelatedness, size imbalance and experience asymmetry in the target country, respectively. From a methodological standpoint, we relied on a logistic regression and a survival analysis, carried out on 117 international joint ventures established by Italian firms in 38 countries in the period 2000–2018. Our findings indicate that the effect of partners’ diversity on termination does vary depending on the nature of diversity involved. Thus, the factors that typically motivate the establishment of an international joint venture may not necessarily support its continuation. Managers should pay attention to the evolution of international joint ventures, considering that a firm’s bargaining position relative to the partner may change over time.