Yang, W: Control Mechanisms in Sino-German Joint Ventures: A

Joint venture parent companies use a number of control mechanisms to execute control in the joint venture. Joint venture boards of directors, top management compensation and top management career development are key safeguarding and resource providing mechanisms to ensure the realization of parent goals. Based on interviews with 25 top managers in the Sino-Germanjoint ventures, we find the following results:(1) The parent company with a majority ownership determines the appointment of chairman on the board of directors.(2) The shared equity ownership leads to a bigger board of directors than the majority equity ownership.(3) Joint venture top managers receive fixed pay and bonus, while they usually do not receive deferred compensation in the forms of stocks and options. The joint venture that provides its top managers with a bonus performs better than the joint venture that does not provide a bonus to its top managers.(4) Joint venture top manager's compensation is often paid by the joint venture, not by the parent company. The joint venture whose top managers' fixed pay is paid by the joint venture performs better than the joint venture whose top managers' fixed pay is paid by the parent.(5) The German parent companies are more active in designating joint venture top managers than their Chinese counterparts. Joint venture top managers tend to work with the parent firms and their subsidiaries after the tenure in the joint venture.(6) Top manager's previous work experience with the parent firm has no significant influence on the JV performance.