MINISTRY OF EDUCATION
LAOS NATIONAL UNIVERSITY
MINISTRY OF EDUCATION AND TRAINING
NATIONAL ECONOMICS UNIVERSITY
Thansamay KOMMASITH

FACTORS INFLUENCING INTERNATIONAL JOINT VENTURES’
PERFORMANCE: AN INVESTIGATION INTO THE
TELECOMMUNICATON INDUSTRY IN LAOS
(Business Administration)
Code:
62.34.01.02 A dissertation summary submitted to the National Economics University
in fulfillment of requirements for the degree of

investigate IJVs’ performance and factors influencing it in the industry in
Laos. Thus, these issues are the focus of this dissertation.
Factors influencing IJVs’ Performance in Telecommunication Industry
in Laos
Many scholars and practitioners have conducted research about what
factors affecting the performance of IJVs. However, their research has
mainly conducted in the context of the developed countries (Ren et al.,
2009). Many previous studies (e.g., Hoang & Rothaermel, 2005; Isobe,
Makino, & Montgomery, 2000; Luo, 2001; and Tong et al., 2008) have
examined IJVs performance, which enhanced human beings’ knowledge
about this attractive topic. However, the conceptualization of IJV
performance and factors influencing it remains an often-debated issue in
IJV research (Reus & Ritchie, 2004).
In recent years, more research attention has been given to study IJVs
performance and factors influencing IJVs performance in the context of
developing countries (e.g. Phan & Ngo, 2009; Phan et al., 2006; Cao,
2012) but it seems that very modest research attention has been given to
investigate the impact of these factors in the context of Laos, especially no
2 study has examined the issue in the Telecommunication industry in Laos.
In other words, this attractive topic has not been investigated adequately in
the context of Laos, especially in the telecommunication sector.
For facilitating the sustainable development and ensure the success
of IJVs in the important fields like the telecommunication industry in Laos,
it is very essential to have better understanding of the current status of the
IJVs’ performance and investigate the determinants of the IJVs’ success or
failure.
Research objectives and questions

differences (Bener & Glaister, 2010; cf., Ren et al., 2009), commitment,
bargaining power, justice, conflict, effectiveness of conflict resolution,
cooperation, and goal compatibility (cf., Ren et al., 2009).1.3 Research methodology
This study employed the case study method. Both secondary data
and primary data were collected to develop the three case studies in order
to reflect IJVs’ performance and the factors influencing their performance
during the time of the research. As this study mainly aims to analyze
factors influencing FDI companies’ performance in the selected cases,
multiple data collection methods were used to increase credibility and
validity.
Specific data collection methods used in this study include desk
research (for collecting secondary data), observation, interviews (both face-
to-face and by telephone), and survey (for collecting primary data).1.4 Contribution of the Study
This study aims to examine several dimensions of the IJVs’
performance and to explore the impact of the key factors on the IJVs’
performance in the context of Lao’s telecommunication industry.
The topic of this study is important and interesting that have
attracted much attention from previous studies.

This study contributes to
the literature pertaining to IJVs’ performance and factors influencing them
in the context of Laos, a developing country that has received very modest
research attention up to date.
The findings of this study help to enrich the knowledge about this

Chapter 3: Research methodology
Chapter 4: Research findings
Chapter 5: Conclusions and discussion

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CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL
FRAMEWORK

This chapter reviews the literature on IJVs’ performance and the
factors influencing it. In the first section of the chapter, the literature on the
five common measures of IJV performance were reviewed, followed by the
review of the key determinants of IJV performance. Finally, the proposed
conceptual framework is presented.
2.1 Literature review on International Joint Ventures’ Performance
Cao (2012, p.72) noted that although the term IJV has many different
meanings, the most common definition of IJV is “a separately legal
business venture that involves two or more entities with
differentnationalities working together to achieve mutually agreed on
business objectives” (Fogler & Reichert, 2002).
IJV performance has been known as broad constructs with different
dimensions. Ren et al. (2009) reviewed many previous studies on IJV
performance and suggested five common IJV performance measures that
have been employed in the literature, including Survival, Financial Output
Measures, Overall Satisfaction, IJV’s goal achievement, and Learning. The
five main measures of IJVs performance are used in this study and are
presented in details in the dissertation.
Survival and Longevity: refers to the number of years that partners


2.2 Literature Review on Factors Influencing IJVs’ Performance
In the literature on IJVs, investigation into factors contributing to IJV
performance have been received much interest from the scholars and
practitioners (Cao, 2012; Rod, 2009). After reviewing past research in the
field, Rod (2009) has summarized the factors that are treated as
independent variables influencing IJV’s performance, and classified them
into two main groups, each factor of which may have direct of indirect
impact on joint venture performance. These factor groups refer to ‘partner
compatibility’ (e.g., organizational culture, management/leadership style,
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strategic match, communication styles, trust, commitment, and propensity
to cooperate), and ‘Socio-Economic factors’ (e.g., opportunity costs,
relative bargaining power, governance/control over JV, and perceived
opportunism).
In the context of developed countries, it has been suggested that the
success of IJVs may be a function of a number of factors. Bener & Glaister
(2010) suggested five main factors influencing IJV performance that have
been given significant attention in the literature as determinants of joint
venture performance. These factors include parent control (Killing, 1983;
Lu & Hebert, 2005), JV autonomy (Hill & Hellriegel, 1994; Lyles &
Reger, 1993; Newburry & Zeira, 1999; Zeira & Parker, 1995), trust
between partners (Madhok, 1995), national culture differences (Brown et
al., 1989; Hennart & Zeng, 2002; Shenkar & Zeira, 1992), and corporate
culture differences (Pothukuchi et al., 2002; Sirmon & Lane, 2004; Weber
et al., 1996).

Cooperation & committment
Trust
Cultural differences
ControlGoal compatibility
IJV Performance
Survival/longevity

Financial performance

Overall satisfaction

IJV goal achievement

Learning

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less frequent. During the visits and meetings, the author, based on
observation, collected data including content of the observed activities and
emotional reactions such as the sense of comfort, frustration, stress, or
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happiness (Nguyen, 2005). The focus of the observation was on the cultural
differences between the partners, trust between the partners, and
cooperation. The expression of satisfaction of each partner in the IJVs was
also observed.

In- depth interviews

For the interviews, all three IJVs operating in Telecom industry in
Laos were selected for investigation. The author used one-to-one
interviews, both face-to-face and telephone interview. The interviews were
carried out in Laotian. Total of 10 interviews from three IJVs were
conducted: 6 with LTC’s managers, 3with Unitel’s managers, and 1 with
Beeline’s manager. Each interview average lasted for 30 minutesfor face-
to-face interview and lasted for 10-15 minutes for interview via phone.
Survey data collection
In order to test the hypothesized relationships in the research model
we employed the survey data collected from 03 IJVs in the
telecommunication industry in Laos.
Measures and questionnaire development
In the survey, the author employed the scales measuring IJV
performance and the factors influencing it. These measures were adopted
and modified from past research while taking into account the suggestions
from the qualitative study.

exploratory factor analyses (EFA) and assessed the internal reliability of
the scales used in this study, using coefficient alpha. While the focus of this
study is to test the impact of several factors on IJVs’ performance, some
descriptive analyses and comparisons among the three IJVs were also
conducted.

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CHAPTER 4: RESEARCH FINDINGS

4.1 The Current Status of IJVs’ Performance in the Telecommunication
Industry in Laos
4.1.1 The Telecommunication Industry in Laos
According to report of MPT (2011), Laos has five key providers
namely: Lao Telecommunications Corporation (LTC), Enterprise of
Telecommunications Lao (LTL), Beeline (Vimpelcom), Unitel (Star Telecom)
and Sky Telecom (Laosky). BMI (2013) has projected that the performance of
Telecom sector in Laos will increase slightly until 2017
4.1.2 Performance of the IJVs in the Telecoms Industry in Laos
Currently there are five telecoms service providers in Laos, of which
there are three IJVs. In the following section, performance of the IJVs are
presented following some key performance dimensions.

4.1.2.1 Performance of LTC
LTC was established in 1996 as an IJV with 51% share of Laos’
governmentand 49% of Thai investor. LTC is the IJV which has the longest
operation time in the telecoms industry in Laos (nearly 20 years). LTC has
been always the market leader, even in the highly competitive environment

mobilephone market at the end 2012.
In the fixed-line market, Unitel officially launched Unihome service in
December 2009 and at first its market share was 4%. However, ony 7 months
later Unitel’s market share was 14%, holding the 2
nd
position in the market.
In April 2010, Unitel also officially launched internet service in Laos
and accounted for 14% of the market share, holding the 2
nd
position in the
market (after LTC). On 15 October 2010, Unitel launched 3G service in 17/17
provinces (Nguyen, 2012).
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In terms of turnover/revenue, Unitel achieved more than 400bn LAK in
2010, sharply increased to more than 800bn in 2011, and significantly
increaded to more than 1tn in 2012 and 2013. The average annual growth rate
was impressive especially in the period 2010- 2012 with great amount of net
profit (almost twice every year in this period of time).
Contrary to the data from the financial reports of Unitel, the perceptions
of Unitel’s managers and senior staff (the findings from the survey) show
relatively low level of performance in all dimensions. The mean values ranged
from 3.11 (for Financial performance) to 3.92 (for Learning). The survey
findings are discussed in the discussion part of the dissertation.
4.1.2.3 Performance of Beeline
In 2003, Millicom (Tigo) together with Laos’government established an
IJV with 78% of share belongs to Millicom and 22% of share belongs to
Laos’government. In Septemebr 2011,VimpelCom Ltd. (Beeline), a leading


4.2 Factors Influencing IJVs’ Performance in the Telecommunication
Industry in Laos
4.2.1. Identification of Factors Influencing IJVs’Performance
In this summary of dissertation, the author mainly reports the findings
from the survey of 3 IJVs in telecommunication industry in Laos.

Dominant Control of the IJV
When examining the current situation of the control mechanism at the
three IJVs, the survey findings showed that the control mechanism at LTC
was highly evaluated (mean = 4.06), followed by Unitel (mean = 3.43) and
Beeline (mean = 3.37). ANOVA analyses provided empirical evidence for
significantly more appropriate control mechanism at LTC compared with it
at Unitel and Beeline (p < .01).
Trust, Commitment and Cooperation
The survey findings showed that although the level of Trust at Unitel
was relatively high (mean = 3.96, the highest score among the three IJVs) the
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Cooperation and Commitment between the partners at Unitel was only at the
modest level (mean = 3.33). There may be some reasons for this fact and this
are discussed in the discussion section.
At Beeline IJV, both Trust and Cooperation and Commitment were
perceived at the average levels (mean = 3.56 and 3.42, respectively). The
results of ANOVA analyses showed thatthere was no significant difference
among three IJVs regarding the levels of Trust (p > .05). However, the level
of Cooperation and Commitment at LTC was found to besignificantly
higherthan it at Beeline and Unitel (p < .05). There was no significant

The multiple-item scales measuring different dimesions of IJV’s
performance were first subjected to EFA (PCA using Varimax rotation with a
criterion of eigenvalue greater than 1.0) to test the construct’ underlying
dimensions and to look for a more parsimonious set of variables for
subsequent analysis. The reliability of each scale was assessed using Cronbach
coefficient alpha. The results confirmed the reliability and initial validity of
performance measures.
Measures of factors influencing IJV’s performance (independent variables)
To assess the perperties of the scales measuring IDVs, the author again
used Cronbach coefficient alpha and conducting EFA. First, all the items
measuring five factors were subjected to EFA and five factors were extracted
as expected. The five-factor solution explained 75.59% of the total variance of
which Factor 1 (Control Mechanism) items accounted for 20.1%, Factor 2
(Trust) items accounted for 19.4%, Factor 3 (Cooperation and Commitment)
items accounted for 12.7%, Factor 4 (Cultural differences) items accounted for
12.7%, and Factor 5 (Goal Compatibility) items accounted for 10.7%. All the
alpha have the values ≥ .70 that confirm the reliability of the scales.
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4.2.2.2 Regression Results
To test the impact of the proposed factors on the IJVs’ performance, the
author ran four multiple regression models, in which dependent variables in
the four models were four dimensions of IJV performance.
The results of multiple regression analysis with Financial Performance
as dependent variable showed that IJV’s performance was explained
significantly by the factors. The regression model was found to be significant
(F = 15.37, p < .01), accounting for 46% of the variance in the data.
Specifically, the regression results confirmed the significant impact of

in all the models. The significant positive impact of Cooperation &
Commitment was found in three models, while the Control Mechanism
showed its significant contribution in two models and Trust in only one
model.
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CHAPTER 5: CONCLUSIONS AND DISCUSION
5.1 Conclusions
The main purpose of this study is to examine several dimensions of
the IJVs’ performance and to explore the impact of the key factors on the
IJVs’performance in the context of Lao’s telecommunication industry.
Among the three IJVs, the performance of LTC, an IJV with the longest
time of nearly 20 years operating in Laos market, were generally suggested
at relatively high level in all the dimensions. Next, Unitel, the IJV with just
over five years operating in Laos market, was considered to make some
great success within a short period of time. However, due to some reasons,
the performance of this IJV was perceived by the managers and senior staff
at the IJV to be at just modest level in all dimesions (just around the
average score). Meanwhile, Beeline is an IJV which has experienced the
transformation of the ownership during the operating time in Laos market.
The performance of this IJV seems not very positive in terms of financial
output measures. However, the various performance dimensions of this IJV
was perceived not really negative (still a bit above the average level).
With respect to the factors influencing the IJVs’ performance, the
qualitative findings suggested five main factors including Control
Mechanism, Trust, Cooperation and Commitment, Cultural Differences,
and Goal Compatibility. However, the survey findings did not support Goal
Compatibility as a significant predictor of the IJVs’ performance. In the

industry and the IJVs’ performance suggest that Laos is still promising
telecoms market for IJVs to explore.
This research identified some key factors which have effects on
IJVs’ performance in Laos. In some cases, there are some factors have
stronger effect than the others. The research findings suggest that
developing an appropriate control mechanism within the IJV can contribute
to the better IJV’s performance. In addition, once foreign partners in IJVs
deeply understand their invested market and culture differences, they can
make clearer plan and avoid mistakes or misunderstanding, so they can
gain greater success.
Besides, managers in IJVs should learn how to build trust between
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the partners. Good cooperation with and high commitment to the partner
and the IJV’s objectives can contribute to better IJV’s performance. Better
communication, consultation with partner and well formulated rules and
operating practices can help avoid conflict.
Implications for Policy Makers
This study is expected to provide some implications for policy
makers in an attempt to create a better business environment and to ensure
the favorable conditions for IJVs to achieve better performance in Laos.
For the benefit of Lao’s economy and society at large, the local government
may want to work together with investors (both local and foreign partners)
to jointly develop successful IJVs. For example, Cultural Differences were
found to be an important barrier for the IJV’s success. Policy makers may
need to do some activities to reduce the distance in terms of culture by
helping the foreign investors to understand better the national culture and
facilitate their better understandings of the corporate culture in the host

• Using multiple item scales are always desirable. Future studies may
want to develop and use more items to measure Goal Achievement and
Goal compatibility.
• Future research can be directed to include other factors as potential
predictors of IJV performance such as conflict, Conflict Resolution, and
justice.
• A longitudinal study can be conducted to explore the relative strengths
of the determinants of joint venture performance over an extended
period of time.