As economies become more globalized, more and more firms are participating in foreign markets. The most popular participation strategies include exporting, licensing, strategic alliances, joint ventures, and direct foreign investment. Each of these involves different levels of risk, capital, and returns.

The use of strategic alliances and joint ventures is rapidly becoming popular with a growing number of multinational firms. According to Cullen, an international strategic alliance is an "agreement between two or more firms from different countries to cooperate in any value-chain activity from R&D to sales". Hitt offered this definition, "joint venture is when an independent firm is created by at least two other firms".

Strategic alliances gained increased popularity in the 1990s, Harbison and Pekar reported that from 1987 to 1992 more than 20,000 new alliances were formed in the U.S, up from 5100 between 1980 and 1987. By 1999, U.S...