Multinational Parent Company, Joint Venture Subsidiary Of The International Control

Now it is a changing era, during which MNCs are changing from time to time. There are not only many opportunities but also many challenges existing the changes of MNCs. One of challenges before MNCs is how to effectively control their IJVs by the MNC parent companies. Then based on the parent companies perspective, how to realize the event that IJVs are offered enough space to develop itself but controlled by their parent companies to optimize the overall performance and strategy of the MNC, and this question has become an important one in international business field.The purpose of this dissertation is to analyse how to effectively control their IJVs by the MNC parent companies. The research are carried out from a new academic perspective which is not aiming at the performance of the IJV but aiming at the control the IJV. The target of MNC parent companies governing IJVs is to optimize the control the IJV but not to maximize the performance of the IJV, which distinguishes the perspective of this dissertation from others.This study attempts to use new research methodology, game theory, to analyse joint ventures. In the previous literatures, empirical studies and theory integration studies are mainly applied, but lack of mathematical studies. This study applys coorperation game theory and other related game theory to explore the control question in IJV so that we could have a better approach to optimized governance or scientific governance.This dissertation is divided into seven chapters.The first chapter briefly introduces research background, research meaning, research methodology, basic framework, innovation and limitation, main concept definition. The second chapter reviews the previous literatures, first introduces the researches of different theory genres on formation of IJVs, then sums up the control researches on overseas subsidiaries, and afterwards highlights the empirical and theoretical studies on controlling IJVs. Finally, I summarize and appraise the previous researches and put forth the research point of this dissertation.The third chapter puts forth a control mechanism framework on IJVs by their parent companies to systematically analyse the control mechanism on IJVs. This framework integrates equity control and nonequity control into internal control, and explore interactive relationship between equity control and nonequity control; brings forward external control to analyse how control an IJV with the relationships outside the IJV itself; brings forward proceeds control to analyse whether continue or cancel an IJV according to its profitable condition to meet the final goal of the parent company.The fourth chapter discusses the IJV internal control game. Firstly, it analyses the game realization mechamism of IJV organizational equilibrium to demonstrate the organizational equilibrium reaching process depending on negotiation powers from the parent companies' internal control and the effect of different parent companies' internal control under organizational equilibrium. Secondly, it brings forward and analyse a control factor to explore the control effect on an IJV by its parent companies with internal control.The fifth chapter constructs an IJV external control game model to mainly explore two questions, participation game and efficiency game. The participation game discusses that how parent company games with an IJV through relationships among the parent company and its subsidiaries to urge the IJV to become one subsidiary of the MNC. The efficiency game discusses that how the parent company uses the game to urge an IJV to work hard to guarantee the enough organizational efficiency. Then it analyses the participation game and efficiency game in the event of exit cost. It also outlines the subgame perfect nash equilibrium regions.The sixth chapter constructs an IJV proceeds control game model. The proceeds control on IJVs by their parent companies means that the parent conpanies decide whether to continue joint venture, or to shift to a wholly-owned subsidiary or to divest from the joint venture according to profitable condition of IJVs. This chapter builds up proceeds game model including a basic model and an extensive model to analyze the game between foreign and local parent companies.The seventh chapter summarizes the conclusions of the dissertation, analyses the related suggestions and apocalypses for the parent companies and IJVs, and puts forth the advice for the future researches on control mechanism and game analysis.The main academic innovation and contribution: 1, this dissertation puts forth a control mechanism framework on IJVs by their parent companies to systematically analyse the control mechanism on IJVs. 2, the internal control game analyses the game realization mechamism of IJV organizational equilibrium to demonstrate the organizational equilibrium reaching process depending on negotiation powers from the parent companies' internal control and the effect of different parent companies' internal control under organizational equilibrium. Also, it brings forward and analyse a control factor to further explore the internal control. 3, external control game mainly explores how do payoff, return on external investment, monitoring, operation duration, stability of MNC system work in external control. The mathematical model also analyses the influences from patience, confidence, work allocation, tolerance and exiting cost. 4, proceeds control game analyses how do learning capability(foreign parent), profit share(equity share), intangible asset protection(local parent) and punishment mechanism(investment transfer) work in proceeds control.