The effect of trust antecedents on the performance of international joint ventures (IJVs) in developing countries: The case of Iran

Abstract

International joint ventures (IJVs), as organisational entities which are formed and controlled by local and foreign firms, are one of the most significant ways of expansion of international firms. IJVs have complex characteristics and the management of IJVs faces many problems.Due to these problems, IJV performance has attracted significant research attention – eventually any strategy has to be evaluated in terms of its success. The aim of this study is to investigate the factors that affect inter-organisational trust and as a result, the performance of IJVs in Iran, a developing country, which is in the early stages of the development of IJVs. According to Abosag and Lee (2012), there are few studies that concentrate on IJVs in developing and Middle Eastern countries and more studies on these areas are required. This empirical study is preceded by a systematic review of the relevant literature that led to the development of a conceptual model. The data were collected from a sample of managers in the industry sector of IJVs in Iran with their Asian partners by using a survey questionnaire, and analysed using the statistical package for social sciences, SPSS V.18. The results from this study show that inter-partner fit factors and relational factors have a strong and positive impact on the level of trust; however, fairness was not found to be positive and significantly related to trust. Religion and country risk were found to have a negative and significant relationship with trust. Moreover, a strong and positive relationship between trust and performance features (satisfaction, goal achievement and learning) and between commitment and performance features (satisfaction, goal achievement and learning) were found. This research provides empirical evidence for inter-organisational trust predictor variables for performance. A key contribution of this research is that it offers a robust framework that explains the antecedents of trust and demonstrates that trust has a definite positive impact on the performance of IJVs. The proposed framework is evaluated and tested against the original criteria of trust in IJVs, exactness and executability. Moreover, this study provides a novel contribution to the growing literature on trust in IJVs, particularly for developing countries such as Iran and the Middle East countries. The results of this research provide us with a meaningful managerial implication for the selection of competitors as IJV partners