Joint Ventures: A New Reality of East-West Cooperation (State-of-the- Art)

A new approach to foreign equity participation and the desire to accelerate the transfer of modern technology and management methods has resulted, in many CMEA countries, in a great deal of new legislation to regulate the process of establishing and operating joint ventures with Western companies. Together with the economic reforms taking place in these countries, which have resulted in more freedom to enterprises and their managers and in more decentralized decision-making, this attitude is facilitating the process of creating joint ventures. As joint ventures constitute a new organizational setting between two economic systems, they have become a very 'hot' topic in many different forums, including the mass media. In spite of the growing interest in east-west joint ventures and due to their short history, there are very few completed studies on the subject. Several international organizations, such as UNIDO and ECE, have compiled studies of legislation for joint ventures and organized meetings between managers from both economic systems to discuss the issue. Bilateral studies between various countries and consultancy reports are also available. Nevertheless, there is a vacuum of empirical studies and analyses of the problems faced by partners, especially during the periods of negotiation and operation. The MTC activity, therefore, has directed its efforts towards a feasibility study on joint ventures, in order to define IIASA's, and specifically MTC's, niche in the field. This working paper documents the state-of-the-art of the issue of east-west joint venturer. The information has been updated through June 1988. It gives a broad picture of the current situation as well as a review of available literature on the subject. The content of the problem is very large in scope and, for the purposes of our feasibility study, has been somewhat condensed to make the information here presented of use, not only to researchers, but to managers as well