Compositional Gaps and Downward Spirals in International Joint Venture Management Groups

Abstract

We argue that compositional gaps in international joint venture (IJV) management groups, along parent company lines, will accentuate distinct managerial coalitions. Such gaps can occur on dimensions of observable demography, less apparent demography, or psychological characteristics. While compositional gaps in IJV management groups can provide the basis for healthy substantive conflict, such gaps - particularly if they are large - also tend to induce relationship conflict and heighten substantive conflict beyond its beneficial range. This can set off a downward spiral of relationship conflict, substantive conflict, and behavioral disintegration in the group. These harmful group processes further interact reciprocally with any tensions that might exist between the IJV parents, engendering a second downward spiral. Our model has implications for the performance of international joint ventures, and it serves as a foundation for designing interventions to avoid the downward spirals we portray.

Keywords: management groups, joint ventures, international organization