The Structure of Decision Rights in International Joint Ventures: A Property Rights and Transaction Cost View

This paper explores the structure of decision rights in International Joint Ventures (IJV) by developing a new theoretical framework combining the property rights and transaction cost explanations. Based on the property rights theory, we distinguish between the more intangible strategic knowledge assets and the less intangible operational knowledge assets, and show that the former have a stronger impact on the assignment of decision rights to the JV partners than the latter. Under the transaction cost perspective, we hypothesise that institutional, cultural and market uncertainties are negatively related to the share of decision rights assigned to the parent company JV partner. Empirical data from the JVs of Austrian companies in CEE provide general support for the hypotheses. This study contributes to the IJV literature by applying property rights theory to explain the impact of operational and strategic knowledge assets on the structure of decision rights in IJVs.