Joint Venture Dynamics: The Effects of Decisions Made within a Parent Company and the Role of Joint Venture Management Control
Posted: 9 Oct 2014
Date Written: October 8, 2014
This study aims at understanding the dynamic processes, which we call JV dynamics, over the life of JV relationships. It focuses on JV dynamics created by decisions made within one of the parent companies. It uses the case study methodology to analyse the antecedents that lead to decisions made within a parent company and to understand how these decisions create dynamic processes. In addition, it investigates the role of the JV management control in these processes. This study contributes to the theoretical insights into JV dynamics in various ways. It shows that in addition to antecedents in the environment of the JV relationship, within the JV relationship, and within a parent company, antecedents in the environment of a parent company can create JV dynamics. These dynamics can weaken or cement a JV relationship. Furthermore, it indicates that specific behavioural features of a parent company’s decision-makers, including its key personnel directly involved in the JV relationship, can create JV dynamics. For example, if a parent company’s decision-makers do not learn over time how to co-operate with the partner, their decisions can easily have unintended effects and lead to JV dynamics. Another contribution is that an unclear decision-making and communication structure of a parent company can hinder effective communication between the parties and thereby lead to inefficiencies in the co-operation and unmet expectations, which increases the level of uncertainty within the JV relationship. A high level of uncertainty within the JV relationship can create complex dynamic processes, especially in combination with tight control of the JV and a strong bargaining power of the parent company. Finally, this study reveals the various roles the JV management control can play in JV dynamics.
Keywords: JV dynamics over time; Effects of a parent company’s decisions; Complexity of JV dynamics; Role of JV management control
JEL Classification: M4
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