Joint Venture

List of Tables. List of Figures. Preface. 1. The Joint Venture Paradox. 2. How Joint Should a Venture Be? 3. Comparative Case Studies: Dominant and Shared Ventures on the Seabed. 4. How to Design a Share Management Joint Venture. 5. The Art of Managing Share Joint Ventures. 6. Options for Technology-seeking Firms: Joint Ventures as a Mechanism for Technology Transfer. 7. Bringing Technology to North America. 8. A Managerial Perspective. Bibliography. Index.

Why do so many joint ventures fail? Despite the fact that their success is the exception rather than the rule, the literature on why joint venture performance has been so poor remains fragmentary. We address this issue, adopting a transaction-cost economics perspective and modeling joint ventures as governance structures that blend the advantages and drawbacks of both markets and hierarchies. Using a data base on electronics industry ventures and event history analysis, we identify several predictors of joint venture failure and test for their influences. A key finding is that the presence of competition between joint venture partners outside of the agreement significantly impairs chances for the operation's chance of survival. We also find clear evidence that the failure rate of joint ventures is nonmonotonic, rising to a peak in the middle term and then declining. Finally, we compare and contrast predictors of terminations due to failure to those due to acquisition of the joint venture by one of its partners. Our overall conclusions highlight implications for strategic choice theory-building and the management of joint ventures.

The article presents a review of the book “Managing for Joint Venture Success,” by Kathryn Rudie Harrigan.

This study expands theoretical research on negotiated culture by testing basic assumptions in the context of a German-Japanese joint venture. Data collected by semi-structured interviews are analyzed using textual analysis software to uncover key issues that became catalysts for negotiation. Results include a model of cultural negotiation linking organizational events with issue domains as points of departure for negotiations. Results show that aggregate models of cultural difference are useful only to the extent that they serve as latent conceptual anchors guiding individuals' cultural responses to events. The study shows that structural/contextual influences together with individuals' culturally determined sense-making with regard to specific organizational events are more useful determinants of negotiated outcomes. Authors conclude that, while it is unlikely we can predict organizational culture formation in complex cultural organizations, we can understand the process of cultural negotiation and as a result be better prepared to monitor and manage in culturally diverse settings.

A number of well-known studies report that between one-third and two-thirds of international joint ventures eventually break up. While many generalizations, explanations, and prescriptions have been based on these statistics, their meaning is unclear. First, all foreign affiliates are subject to normal business risk, and to the risk that they will be divested by parents for strategic or financial reasons. Are these risks higher for joint ventures than for wholly-owned subsidiaries? Second, joint ventures may be shorter lived not because of their joint venture status, but because affiliates which are joint ventured have other characteristics that make them more likely to exit. To know whether joint ventures are shorter lived, one must control for the other factors that affect the longevity of affiliates, whether wholly owned or joint ventured. Third, many joint ventures contracts contain clauses that allow partners to sell their stakes to one another at specific intervals. Because they make exit easier, joint ventures should have shorter lives, but these shorter lives should only be due to sell-offs, not to liquidations. It is therefore important to see whether the supposedly higher termination rate of joint ventures stakes is due to a higher rate of selloffs or to a higher rate of liquidations. In this paper we (1) compare the longevity of stakes in joint ventures versus those in wholly-owned subsidiaries (2) while controlling for other factors that affect the longevity of such stakes and (3) while distinguishing between two types of exit, those through sale and those through liquidation. While past authors have addressed these three issues in piecemeal fashion, we believe we are the first to address them simultaneously. We analyze the factors that affect the longevity of 355 Japanese stakes in U.S. manufacturing affiliates. Controlling for all the factors that affect exit rates, we find that Japanese parents are more likely to terminate their stakes in U.S. joint ventures than in wholly-owned subsidiaries. This higher termination rate of joint venture stakes is explained by a higher probability of selling them, but not of liquidating them. Most of the other factors that have been found significant in explaining gross divestment of foreign affiliates do in fact only affect exits through sales, but not exits through liquidations. Hence it is true that joint ventures have shorter lives, but dangerous to interpret this finding as necessarily meaning that they are more likely to "fail".

This study examines how joint venture partners' opportunism is influenced by environmental volatility in a drastically changing emerging economy. Building on transaction cost and information‐processing theories, we develop the hypothesis that opportunism increases to cope with industry structural instability, information unverifiability, and law unenforceability, the three interrelated yet distinct characteristics that jointly describe environmental volatility in an emerging economy. Our analysis of 188 foreign joint ventures in an emerging market suggests that opportunism increases with information unverifiability and law unenforceability. These relationships are even stronger when joint ventures depend more on the host country environment, but weaker when joint ventures operate in faster‐growing industries. Finally, opportunism is found to play a mediating role in the relationship between environmental volatility and joint venture performance. Copyright © 2007 John Wiley & Sons, Ltd.

This study examined the impact of joint venture formation strategies on the market value of parent firms in the information technology sector using an event-study perspective. We found that (1) ann...

This study is an integrative examination of three aspects of joint venture formation: complementarity of the partners, ownership/control and joint venture autonomy. Past research has examined each of these concepts individually without considering potential interactive effects. Moreover, most past studies have used global measurements ignoring critical dimensions within each concept. For example, most studies of ownership/control have examined the effects of dominant control by one partner versus shared influence. This approach overlooks the possibility that joint venture parents may exert varying degrees of control over decision making in the different functional areas. Personal interviews of 98 managers involved in oil and gas exploration and production joint ventures are used in an investigation of the three joint venture concepts. In this industry, complementarity had little if any effect on joint venture performance. In fact, complementarity actually appeared to have a negative impact on several dimensions of joint venture performance. Qualitative data suggest that joint venture partners with distinctive competencies in different functional areas may experience difficulties in implementing potential complementarities. Moreover, it may be important for all joint venture partners to perceive some influence over the strategic decisions of the joint venture, regardless of their actual influence over those decisions. Perhaps the most important implications of this study are for future joint venture research. First, a dimensionalized approach to the issues of implementation and performance is justified. Examining ownership/control over each functional area provided additional insights into issues of joint venture management and aided in explaining the results of tests using global measures. Second, analyses of joint venture autonomy and ownership/control produced different results based on the functional area under consideration. Thus, the use of global measures is likely to result in the loss of information. Third, joint venture performance is a multidimensional concept. The results of the analyses related to performance varied according to the dimension of performance under consideration. Some measures of performance were actually negatively related to others. It is believed that this outcome is appropriate. Performance is measured relative to the various goals established for a joint venture. Some goals may be in conflict with others or present managers with tradeoffs to consider. Research that fails to consider multiple dimensions of performance may lose some of the richness of the performance concept. Finally, joint ventures are particularly likely to be subject to goal conflicts since they are formed by two or more firms, each with its own set of goals. Ultimately, a joint venture is measured by the extent to which the venture meets the goals and expectations of the individual partners. As a result, it is necessary for joint venture research to examine performance related issues from the perspective of the individual partners.

International joint venture (IJV) research largely omits social and cognitive processes and, hence, overlooks their potentially important implications. This paper presents a four-year longitudinal investigation into the social identification and social enactment processes in a British-Italian, shared management joint venture. Using social identification and social enactment theories as conceptual anchors, the study reveals that national social identities were the dominant sense-making vehicle used by team members, although multiple sources of social identification were possible and present in this IJV. Contextual changes occurred that could be expected to favor organizational (IJV-based) social identities, but the dominant use of nationality-based identities did not change. Our findings suggest that social identity enactments (using particular boundaries to define primary social identities) by team members mediate the relationship of contextual variables, both environmental and structural, with group and organizational outcomes (such as role investment and job satisfaction). Our empirical results shed light on unresolved debates in the IJV literature, e.g., the implications of cultural distance and shared management for IJV performance. This study also contributes to social identity theory by highlighting promising directions for development of contextual and longitudinal dimensions in that research stream.

The author posits that the joint venture (JV) form of governance imposes a greater burden of bargaining and political influence costs than is present in a hierarchy. The JV's incremental costs derive from shared sovereignty and incomplete contracting. The magnitude of those costs is related to parental differences, factionalism, and task interdependence in the top management team (TMT), and dynamism in the task environment. The costs are argued to undermine the quality of TMT decision making, thereby negatively affecting organizational adaptation, performance, and survival.