Termination and endgame scenarios in international joint ventures
by Ursula F. Ott
Global Business and Economics Review (GBER), Vol. 2, No. 2, 2000

Abstract: The paper studies the applicability of game theory to the last period of an international joint venture life cycle. Since the past three decades were marked by the prosperity of multinational enterprises, IJVs are coming more and more in a mature stage. The termination of a cross-border business transaction causes, in general, various problems and needs mechanisms to solve. Besides legal considerations, issues of decision-making in endgame scenarios, such as the strategic settings of co-operation and control, play an important role. The special structure of the IJV-triangle might tell more about future ways of termination and the effect of co-operation and conflict. Not only the constellation of the players but also the duration of an IJV contract (short-term and long-term) has an impact on the behaviour of the players in the last stage of the life cycle. Using theoretical frameworks of game theory like common agency games and repeated games in combination offers a tool for dealing with special termination issues. ''Divorce scenarios'' capture problems of reputation, learning and renegotiation in which the repetition of certain actions leads to the end of the game.

Online publication date: Mon, 07-Feb-2005

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