Understanding Environmental Risk for IJVs in China

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. 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.