Configuring Absorptive Capacity and Inter- Partner Relationships in International Joint Ventures: An Interpretive Structural Modeling Approach

Purpose - International partnerships, particularly international joint ventures (IJVs), have emerged as an integral part of Korean firms’ internationalization strategies to navigate foreign markets by diversifying risks among partners. The study explores how IJVs develop the absorptive capacity required for sustainable inter-partner collaboration. It examines the processes of constituting absorptive capacity by focusing on interactions, offering a comprehensive analysis of these dynamics rather than the content of inter-firm collaboration. Design/Methodology - Using interpretive structural modeling (ISM), this study identifies twelve elements of absorptive capacity and inter-partner relationships in IJVs, along with their interactions among the factors. Findings - The findings indicate that absorptive capacity constructs are interrelated, thus self- enhancing themselves. Commonality in the business background and IJV partners’ learning orientation are important contributing factors in fostering absorptive capacity. Additionally, absorptive capacity is determined by inter-partner collaboration. Learning orientation factors possess high driving power in the integrated theoretical framework by influencing the overall absorptive capacity. Originality/value - This study presents an integrated ISM theoretical framework highlighting the contributing factors and their interactions of absorptive capacity in IJVs, providing valuable implications for Korean firms establishing international partnerships.