STRATEGIC MOTIVES OF MALAYSIAN FIRMS ENGAGING IN INTERNATIONAL JOINT VENTURE ABROAD

Extensive studies show that engaging in an international joint venture is a strategic option for firms to expand their business globally. Firms are able to create economies of scale and critical mass; reduce risks; learn new skills and technologies from partners through engaging in IJVs. Malaysian government encourages local firms to venture overseas. One of the key thrusts of the Third Industrial Master Plan (IMP3) is crossborder investment. A huge proportion of crossborder investments by Malaysian firms are realized through engaging in IJVs. According to World Investment Report 2009, Malaysian foreign direct investments (FDI) were USD 2.97 bln. in 2005. It increased dramatically to USD 14.06 bln. in 2008. The FDI was increasing at average of 124.35% per annum from 2005 to 2008. Although, ample research has examined strategic motivations for IJVs formed by MNCs from developed countries, little research has examined strategic motives for IJVs formed by MNCs from developing countries. This study is going to identify the strategic motives of Malaysian firms engaging in IJVs abroad.