Dynamics of Value Creation in Indian Bilateral Cross‐Border Joint Ventures: A Systems Approach

• Date: 01 November 2013
• Author: Sanjay Dhir,Amita Mital,Samir K. Srivastava
• Published date: 01 November 2013
• DOI: http://doi.org/10.1002/jsc.1952

Strat. Change 22: 471–483 (2013)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.1952 RESEARCH ARTICLE

Copyright © 2013 John Wiley & Sons, Ltd.

Strategic Change: Brie ngs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.1952

Dynamics of Value Creation in Indian Bilateral

Cross-Border Joint Ventures: A Systems Approach1

Sanjay Dhir

Chandragupt Institute of Management Patna, India

Amita Mital

Indian Institute of Management Lucknow, India

Samir K. Srivastava

Indian Institute of Management Lucknow, India

Introduction

 e purpose of this study is to build and validate a system dynamics model for

‘value creation’ in Indian bilateral cross-border joint ventures by focusing on the

dynamics of partner asymmetric motives coupled with partner selection criteria,

partner characteristics, and institutional arrangements.  e study presents a

closed-loop feedback perspective of value creation in joint ventures, which is often

neglected in extant research.  e dynamics of asymmetric motives and its deter-

minants have also been ignored in previous studies.  is paper  lls the above gaps,

develops a conceptual model, and thereafter validates an integrated modeling

framework, using system dynamics. We borrow from the existing literature, sec-

ondary data sources, and industry practices for the same.  e proposed framework

is the  rst of its kind to combine descriptive modeling with optimization tech-

niques and statistical analysis. It also provides detailed analysis of the causal e ect

relationship for dynamics of ‘value creation’ in a cross-border joint venture (CBJV).

 e positivist approach to science has as one of its fundamental tenets the

elucidation of causal relationships amongst factors in the system under study. With

respect to CBJV value creation, it is precisely the nature of these relationships that

has not yet been addressed systematically in the extant literature.  e result is a

set of disjoint  ndings, each of which addresses just a subset of the factors and

variables involved in the CBJV. Furthermore, the e ect of the interplay between

variables and factors in di erent subsets (i.e., di erent scholarly articles) has largely

been unknown.  rough system dynamics, however, the totality of the interac-

Feedback structures help in

understanding the impact of

changing dynamics and managers’

decisions on short- and long-term

value creation in CBJVs.

Interdependence among

intervening factors creates

unavoidable feedback that further

exacerbates the dynamic

complexity of CBJVs.

The four cases discussed in this

paper elaborate and explain the

underlying investigated

phenomenon of value creation in

CBJVs over time.

The proposed approach helps to identify all pertinent factors and causal

relationships which in uence value creation cross-border joint ventures (CBJVs).

1 JEL classi cation codes: M10, M11.