International Joint Venture: An Ideal Mode of Entry in a Developing Country

Bangladesh has a great potential for foreign firms for both trade and investment but Australian companies have shown little or no interest to that opportunity. Since the liberalisation of its investment policy in the early 1980s, Bangladesh has attracted a considerable number of foreign investment projects, mostly in joint venture with local companies. There is a myth in the foreign investment community that international joint ventures (IJV) are less successful in developing countries. Empirical data on performance of IJVs in Bangladesh are used to examine that myth. The paper also answers the question: why some international joint ventures succeed while other fail? Key determinants of IJV performance have been identified by statistical analyses of empirical data. The paper concludes with recommendations for the prospective Australian investors in Bangladesh.