INTRODUCTION: In today's global world, multinational corporations (MNCs) must find new markets to remain competitive. One way they can do this is through IJVs. Hyder and Ghauri (2000) estimate the growth of IJVs to be 25% per year. As defined by Geringer (1988), a joint venture (JV) is when two or more distinct companies come together and form a new entity. Geringer and Hebert (1991) extend this definition to include IJVs and state that if the headquarters of one of the partners is outside the country in which the JV is established or if it has operations in multiple countries, it is an IJV. For example, Sony Corporation and Ericsson establish UK-based Sony Ericsson Mobile Communications. The headquarters of Sony Corporation is in Japan while the headquarters of Ericsson is in Sweden (Sigurdson 2004). An IJV has a high level of interaction and cooperation between the parties involved (Condon 2011). This increases the complexity involved, leading IJVs to have a 30–70% chance of not achieving their objectives (Bamford et al. 2004) while 50% of IJVs are terminated early (Lunnan 2008). The following essay explores the reasons why companies enter IJVs, despite their high failure rate. It also provides recommendations to companies to enable them to increase their chances of success. REASONS TO JOIN AN IJV: Businesses can grow internally or externally. However, not all companies have adequate resources and capabilities and are therefore looking for partners. Studies have shown that more than two-thirds of companies were dependent on external growth (Hewitt 2005). There are five economic theories that explain why companies opt for IJVs. Transaction cost economics: firms form an IJV to...... focus of article ......o, A. (2008), "Boeing and Tata Industries announce Indian joint venture", Industry Week. Available at: http://www.industryweek.com/articles/boeing_tata_industries_announce_india_joint_venture_15820.aspx [Accessed 20 March 2011]. Sigurdson, J. (2004), 'The Sony-Ericsson Endeavour: Part 1', Institute of Innovation Hitotsubashi University Research, Working Paper, (Tokyo: Japan).Tsang, E.W.K. (2000), “Transaction Costs and Resource-Based Explanations of Joint Ventures: A Comparison and Synthesis,” Organization Studies, 21(1 ): pp. 215-242.Yan, A. and Luo, Y (2001), International joint ventures: theory and practice. (New York and London: M.E. Sharpe, Inc.). Zajac, E. J. and Olsen C. P. (1993), "From Transaction Cost to Transactional Value Analysis: Implications for the Study of Interorganizational Strategies," Journal of Management Studies, 30(1): p.. 131-145.