Central and Eastern Europe become an attractive area for foreign investors willing to take risks, according to Hyder and Abraha (2003). The authors argue that in this region shared-control modes of foreign entry is preferable, because it helps reduce political and legal risks, and minimize investment risks. However, differences in knowledge base of partners can lead to conflicts, for example, mentioned in previous research frequent conflict between global and local optimization of strategy (Inkpen and Beamish, 1995). In general, conflicts lower performance of IJVs and decrease the likelihood of survival (Fey and Beamish, 2000; Hennart and Zeng, 2002; Parkhe, 1991; Richard, Barnett and Chadwick, 2004; Steensma and Lyles, 2000). Thus, control is needed, as according to Yan and Gray control in international joint ventures is "the amount of decision power each parent exercises in the venture's daily operation" (2001: 297), because it strongly effects venture performance.
The objective of this paper is to answer the following question: Can control reduce co-management contradictions and conflicts, and, thus, improve performance in IJVs? To achieve this objective I contrast IJVs characterized by high level of cultural differences with high probability of conflicts, although it is difficult to clearly define this kind of IJVs. First of all, it is important to consider the most representative economies in which conflicts can be more common taking into account that cultural differences between two developed countries are substantially less than between a developed and a developing country (Hyder, 1999). Thus, this research intends to examine conflicts between Western and transition economy partners in IJVs operating in the region of transition economies, which consists of former planning economies moving to free market, because foreign firms often experienced cultural differences after they had entered a transition economy market (Cattaneo, 1992; Fey, 1995). Choice of partners from a Western (developed) or a transition economy in this context was also supported by Kennedy's notion that there were important differences between Western and Eastern Europeans in transition culture (1997: 5).
The objective of this paper is to answer the following question: Can control reduce co-management contradictions and conflicts, and, thus, improve performance in IJVs? To achieve this objective I contrast IJVs characterized by high level of cultural differences with high probability of conflicts, although it is difficult to clearly define this kind of IJVs. First of all, it is important to consider the most representative economies in which conflicts can be more common taking into account that cultural differences between two developed countries are substantially less than between a developed and a developing country (Hyder, 1999). Thus, this research intends to examine conflicts between Western and transition economy partners in IJVs operating in the region of transition economies, which consists of former planning economies moving to free market, because foreign firms often experienced cultural differences after they had entered a transition economy market (Cattaneo, 1992; Fey, 1995). Choice of partners from a Western (developed) or a transition economy in this context was also supported by Kennedy's notion that there were important differences between Western and Eastern Europeans in transition culture (1997: 5).
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