Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms

We examine international joint ventures in the telecommunications industry in Brazil, where pyramidal groups are ubiquitous. We explain how corporate governance differences between pyramidal groups versus widely held freestanding firms can lead to joint venture failures. Our empirical results show that joint ventures between pyramidal group-member firms and partners from countries where pyramids are rare have significantly elevated failure rates, while joint ventures with partners from countries where pyramidal groups are ubiquitous are more likely to succeed. Further, we provide clinical examples illustrating the mechanisms driving divergent partnership performance.

Published Date
14 February 2025

Written By
Bernard Yeung, Randall Morck, Susan Perkins

Article Type
Journal Article Video Abstract

Topics
Cooperative Strategy, Global Strategy

Interest Group
Cooperative Strategies IG, Global Strategy IG

Content Source
Global Strategy Journal