Repeated moral hazard in international joint ventures: inter-temporal culturally sensitive incentive schemes for hidden action

Ott, U.F. ORCID: 0000-0002-3469-0260, 2015. Repeated moral hazard in international joint ventures: inter-temporal culturally sensitive incentive schemes for hidden action. Research in International Business and Finance, 35, pp. 166-179. ISSN 0275-5319

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Abstract

This paper studies a repeated game of contracting in International Joint Ventures (IJVs) on the basis of information asymmetries due to different cultural backgrounds. Reputational effects, renegotiation and cooperation between the players are analyzed by using formal models. The organization, success and failure of an IJV are determined by the effort levels induced in each stage of the life-cycle. Besides managerial efforts, the cultural distance and convergence influence the design of long-term contracts in form of incentives for efforts of cultural cooperation. This leads to a dynamic contracting over the life-cycle of an IJV, in order to avoid cheating and to enhance co-operation on a cultural and managerial level. The outcome is the design of inter-temporal, culturally-sensitive incentive schemes as a new approach to contracting in IJVs.

Item Type: Journal article
Publication Title: Research in International Business and Finance
Creators: Ott, U.F.
Publisher: Elsevier
Date: September 2015
Volume: 35
ISSN: 0275-5319
Identifiers:
NumberType
10.1016/j.ribaf.2014.09.011DOI
S0275531914000555Publisher Item Identifier
Divisions: Schools > Nottingham Business School
Depositing User: Linda Sullivan
Date Added: 12 Nov 2018 09:59
Last Modified: 12 Nov 2018 09:59
URI: http://irep.ntu.ac.uk/id/eprint/34905

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