Valuation biases and the persistence of international joint ventures

Reference:

Klossek, A., Meyer, K. E. and Nippa, M., 2008. Valuation biases and the persistence of international joint ventures. In: Academy of Management 2008 Annual Meeting: The Questions We Ask, AOM 2008. Academy of Management.

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Abstract

Investors often retain their initial set-up of an international joint venture (IJV) even when more beneficial alternatives have emerged. Such persistence appears inconsistent with rational decision-making. We analyze this persistence to advance the theoretical analysis of strategic decisions in international business with a focus on switches of ownership modes. More specifically, we propose a model that explains how cognitive biases may affect managerial valuations and thus decision-making regarding IJVs.

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