Intermediate Modes and International Business

Since 1980, firms have made increasing use of joint ventures, networkbased arrangements, and other forms of intermediate transacting modes for both domestic and overseas projects [2]. However, many of these cooperative initiatives have performed poorly; estimates of the failure rate sustained by multinational joint ventures, for example, range from 37-70% of all those formed [8, 10]. Can history provide any insights regarding the determinants of successful intermediate mode operation? This paper applies contracting theory to seven cases in order to identify factors important o the performance of cooperative business ventures [1, 4]. The first case considers aspects of the Holt-Swire-Scott (HSS) network, which engaged in serial contracting involving transport, trading, and manufacturing ventures in the Far East over a period of nearly 100 years. The second case covers thirteen European armament manufacturers who formed the Nickel Syndicate as a cooperative purchasing framework which interacted with foreign suppliers from 1901 to 1939. The third case treats International Curtis Marine Turbine and British shipbuilder John Brown Co. Ltd., who formed a pyramidal licensing structure which transferred and improved turbine technology from 1908 until well into the inter-war period. The fourth case shows how Union Steam Ship Company of New Zealand (USS) relied on an inter-organizational network, consisting of U.K., U.S., Canadian, and Australian members, to support technological innovation between 1913 and 1939. The fifth case describes Oriental Paint (OP), formed as a multinational joint venture by John Swire & Sons (JSS), Pinchon Johnson & Co. (PJ), and Chinese interests in 1932 to manufacture paint in China and in a modified form still operates in Hong Kong today. The sixth case considers another multinational joint venture, this time formed by Australian owned Western Mining Co. (WMC) and two U.S. partners, the Hanna and Homestake mining firms (H/H), which explored for iron ore briefly in the 1960s. Finally, the New South Wales Bottle Co. (NSWB) constructed a supplier chain that operated from 1909 until the early 1980s. Case selection was influenced by a desire to illustrate the dynamics of a wide array of intermediate modes involving a broad range of industries. The study offers long, chronological coverage to show the impact of changes in technology, legal, and market conditions and to assess those factors that determined longevity. In order to learn from success as well as failure, the sample includes projects that achieved all their