Contractual Joint Ventures in China: Formation, Evolution and Operation

The book fills a gap in the existing literature on foreign direct investment (FDI) in China. Contractual Joint Ventures (CJVs) is the least understood form of FDI prescribed by Chinese government. Compared to a substantial research on Equity Joint Ventures (EJVs) and Wholly Foreign Owned Enterprises (WFOEs), CJVs have been neglected and simply treated as a variation on EJVs. This pioneering study reveals the nature of CJVs as a type of non-equity based relational contracting arrangement, possessing features that lie between their market and hierarchy alternatives. Drawing upon contemporary theories in international business and based on the author’s rich survey data, the book offers important insight to the choice of CJVs over alternative contractual arrangements from both foreign and Chinese firms’ perspectives. The book also shows why CJVs remained an efficient governance structure over time in a changing institutional environment and reveals how the dynamic elements of trust, learning and dispute resolution approaches shaped the management of CJV relational contracts. In a broader scope, the book contributes both to the theory and the practice of international business organization by providing a finely tuned analysis of an under-researched non-equity cooperative alliance in international business.