Extant research into the performance impact of cultural distance (CD) in international joint ventures (IJVs) has produced inconsistent results. This study seeks to resolve some of the inconsistencies by combining two opposing theoretical perspectives, i.e. the cultural familiarity lens and Positive Organizational Scholarship, and by examining the underlying relationships of the entities involved in IJVs. We theorize that CD between the focal firm’s home country and the partner firm’s home country has a negative impact on the focal firm’s abnormal returns, since CD hampers the interaction between the parent firms. On the other hand, CD between the focal firm’s and the IJV’s home countries has a positive impact because CD pools diverse and unique resources that enhance operational synergy in the IJV. We further postulate that prior IJV experience moderates these relationships, contingent on the level of success of the experience. Using data for 687 IJV announcements, we find significant effects of CD on market reactions to IJVs consistent with the hypotheses. Our work reconciles the tension between CD’s positive and negative influences and documents that CD’s impact on market reaction to IJV announcements fundamentally depends on whose CD is considered and what type of experience a focal firm possesses.