Understanding Environmental Risk for IJVs in China

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Firms still have great difficulty joint venturing successfully in China. We contend that the current understanding of environmental risk in China is incomplete. Specifically, the current conceptualization has three problems: 1) lack of integration of unique Chinese environmental characteristics, 2) incomplete distinction between different types of environmental risk, and 3) lack of a conceptualization of how the risk pattern changes as the economy transitions.

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We extend the current risk framework to include the unique features of the Chinese context. We offer guidelines for managing risk tradeoffs over time using two key structural decisions: Channel partner relationship and equity ownership.