L'influence des facteurs structurels sur le choix de mode de présence

Section 2 :

Degree of internationalization

The joint ventures are strategies concerted in the form of a joint undertaking. However, the partners of a joint venture prefer to limit their engagement and their financial risk by choosing an adequate form compared to their capacities.

1- Methods of establishment

After having decided to create or develop a joint subsidiary, the company must choose a form of participation. The creation of subsidiary companies can take varied forms.

The majority of the multinationals choose, at the beginning of their internationalization, to penetrate in a local company with an aim of better knowing the market, waitings of the consumers, the practices, the competitors. This phase if it leads to attractive prospects, the persons in charge cause a very important new issue of capital and since the local capital is very insufficient, the multinational takes the control of the company in question. This step reflects the importance of the distribution of the capital since it determines the decision-making powers between the partners.

According to Wirth (1992)^45(*), the idea of an equal distribution with 50-50 is potentially rich in insoluble blockings. The parity thus is seldom chosen, except in the case where, to avoid the charge of agreement, one would accept the risk of blocking to show the independence of the subsidiary company towards his head offices.

The most frequent situation is thus that in which a partner holds the decisive majority. In practice one finds the alternative following :

it absolute majority : the contractor must hold the bar in hands well. What supposes the desire to name the brains trust or, at least, to acquire the majority there. The disadvantage lies in the load increased in financing, risk and monitoring.

it significant minority : this participation shows the desire clearly to limit the risk and the monitoring, n the other hand of a less influence.

From another point of view the minority investment can very effectively prepare the massive entry on a local market. A small starting company will make it possible to create of any part a great modern manufacturing unit realizing of the larger or more frequent investments.

2 it level of investment and control per mode of joint venture

Eleven notes of the range

Coût de transaction

Coût de contrôle

Degré d'internalisation

Subsidiary company 100%

Majority joint-venture

Joint-venture 50-50

Minority joint-venture

Concession of resource

License

Contract of offer

Contract engineering department

Machine turn-key

Free exchange

Source : Economy and Industry, quarterly letter of the Saint-Gobain Company, n°68, December 1992, quoted by Joffre P (1994) : « To include/understand the universalization of the company » Economica Edition

The joint majority ventures 50-50et seem to have the favor of certain companies of the sectors of high technologies ; it is indeed in these fields that the sensitivity of the companies to the rise of the costs of coordination and control is strongest.

The search for solutions bringing a compromise between a relative internalisation and less and/or shared costs of control is thus active in these companies.

Moreover if one practical proves to be effective and that industry is competitive one would have to expect that it is adopted by the other surviving firms in this industry.

In the literature on the modes of entry it appears that the firms exert more control when the volume of patents increases. The expenditure in R & D makes increase wide license and still of advantage the wide one of the investments (Davidson and Mc Fetridge)^46(*)

Cheaper and less risked, the joint ventures flower like new notes of the range of the modes of presence abroad. Caused by the host countries of the investment or chosen by the Co-investors, the joint ventures are not defined only negatively (less expensive and less risky) but also positively as support having a multiplier effect of technological, industrial and commercial know-how. In addition, they preserve a certain control of the company which invests even if this last is attenuated by the presence of one or more partners. Shared control is in any case a less mal.Section^47(*) 3: Specific factors of the joint ventures

The choice of a particular mode of presence is related to a great number of various factors. It varies according to characteristics' of the product such as its degree of differentiation, its importance, its age and technology concerned.

It could depend on certain characteristics of the firm such as its size, its resources, its degree of diversification and its policy.

Finally, the choice of the mode of presence can be determined by external environmental factors ; such as the restriction on the free exchange and the investment imposed by the country host, size of the market of the country host and his geographical and cultural distance.

* ⁴⁵ Longefeld W K (1992) COp-cit

* ⁴⁶ Davidson & Mcfetridge (1985) «  Keys characteristics in the choice off international technology transfer mode " 16 Summer 5-22

* ⁴⁷ Joffre P (1994)  COp-cit