Exploring the development of supply chain international joint ventures

Purpose – The purpose of this paper is to empirically explore how prior exchange relationships may impact a local firm's decision to participate in a supply chain international joint venture (SC‐IJV). Design/methodology/approach – An exploratory study of the influence of prior working relationships using a sample of 32 US and European‐based SC‐IJVs. First, a cluster method was used to determine the two categories of local firms' motivation to form SC‐IJVs with foreign partners. Next, a discriminant analysis revealed the differences between the two categories in terms of the emphasis put on prior exchange relationships when forming SC‐IJVs. Findings – Results confirm two major types of motivations for a local firm to participate in a SC‐IJV: exploration and exploitation. Moreover, the motivation types are varied in terms of the emphasis placed on a prior working relationship with the SC‐IJV partner. While exploitation‐oriented firms consulted a previous working relationship experience before forming a supply chain IJV, exploration‐oriented firms did not. Originality/value – This study shows that Eastern European firms can be separated into two categories in terms of SC‐IJV goals: those focused on learning (exploration) and those focused on strategic behavior (exploitation). Second, the study shows that the firms favoring exploitation prefer a past working relationship with the potential partner, while those favoring exploration did not. The study is exploratory in nature, but provides a solid platform on which to base future research.