Distributive Justice and Joint Venture Termination: A Social Exchange Perspective

Abstract

What role does distributive injustice play in joint venture (JV) termination? We define distributive injustice as a deviation from the contractual allocation of JV-related benefits caused by private benefits. Drawing on social exchange theory, we argue that perceptions of distributive injustice severely damage relationship quality and lead to eventual JV termination. We also suggest that, while both economic and justice considerations influence joint venture termination, they have different implications for JV termination mode. Based on a sample of 284 joint ventures formed between 1996 and 2010, we find evidence that distributive injustice increases the likelihood of JV termination in general, and the likelihood of acquisition of the JV by one of the partners, in particular.

Keywords: Joint ventures, joint venture termination, distributive justice, social exchange theory, private benefits