When Local Partner Knowledge Is Embedded: The Choice Between Greenfield and Acquisitive International Joint Ventures
Year: 2026
Type: article
Abstract: ABSTRACT This study investigates how embedded knowledge assets influence the strategic choice between greenfield and acquisitive international joint ventures (IJVs). Integrating transaction cost theory with a knowledge‐based view, we theorize that establishment mode decisions are driven not only by governance efficiency but also by the need to access and preserve tacit, context‐specific partner knowledge. We focus on three forms of embedded assets held by local firms—cluster‐specific knowledge, familiness, and product‐specific knowledge—and argue that their non‐tradable and non‐replicable nature increases the attractiveness of acquisitive IJVs. Using a dataset of 355 foreign market entries by firms from 31 countries into Italy over a 10‐year period (2005–2015), our findings show that multinational enterprises are significantly more likely to choose acquisitive IJVs when the local partner's assets are deeply embedded and difficult to transfer or replicate into a newly created entity. Specifically, tacit knowledge and networks within industrial clusters, family firms' specific assets, and operational expertise tied to product‐specific knowledge are all associated with a lower likelihood of choosing greenfield IJVs. These results contribute to establishment mode research by demonstrating that embedded knowledge is a critical determinant of IJV formation and by offering an integrated framework for understanding governance choices in IJVs.
DOI: 10.1002/tie.70138
Author: Maria Cristina Sestu
Institution: University of Groningen
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,460
OpenAlex ID: W7160208509