Why do some international joint ventures succeed whereas others fail Essay

Why do some international joint ventures succeed whereas others fail - Essay Example Hence owners can disagree on the international venture’s goals making the performance of the venture more difficult to define and measure than performance of conventional organizations. Therefore, dissolution of international joint ventures (IJVs) signals not only the failure of the joint venture but also a realization of agreed goals by involved partners. Various scholars draw upon various contextual and internal factors organised in various theoretical perspectives to explain instability and failure of international joint ventures. First, the study considers benefits of conceptualising IJVs as cooperative or expedient collaboration and secondly draws on the distinctions to examine differences between instability and failure theories through structural and processual lenses. International joint ventures as cooperation experience instability from factors that erode trust, commitment, forbearance and other similar partnership qualities. For instance, a venture that lacks compli mentary with the partner is bound to be unstable; moreover, the same applies to ventures associated with significant partner differences regarding values, identities, goals, interests and practices (Salk and Shenkar, 2001). The perspective of selecting the wrong partner reduces the possibility of developing trust, which compromises cooperation making the venture vulnerable to instability. Another view conceptualises IJV as transitional organization, whose initial structure and internal dynamism create inevitable tendency to instability, which results in dissolution (Peng and Shenkar, 2002). The approach presumes that partners engage in IJVs with expedient motives seeing the partnership as a short-term instrument for serving their competitive self-interests by exploiting other partners’ weaknesses or gaining at the expense of other partners. Within this view, one variant stresses structural factors to explain imminent instability of IJVs and the other theorises instability and failure as products of internal political processes. Early influential approaches emphasise the need for parent partner to establish appropriate governance structures because when expedience prevails, IJV pose great risks to the parents like the loss of technical or strategic capabilities to opportunistic behaviour (Noe, Rebello, and Shrikhande, 2002). Most scholars are persuaded that that dominant equity control by one parent likely leads to venture success since benefits are associated with the unitary control framework (Hauswald and Hege, 2003). Similar to equity shares, which have gained dominant management control associated with the success of IJV, equal division of management control is associated with inter-parental disputes, instability and failure. Hence, structures suggest IJV’s destiny avails itself in control structures established in the original bargain. However, another complementary perspective argues that venture instability is a process dev eloped by paren ts in the lifetime of the IJV. As competition for competence, the IJV process involves multiple ‘micro bargains’ between parents as each seek to acquire the strength to exploit weaknesses of the other, the processual approach accentuate the significance of bargaining power as each manoeuvre within the IJV structure to augment its control and attain its ends (Hamel, 1991; Inkpen and Beamish, 1997). Acquisition of knowhow appears to the central aspect in joint ventures, besides joint ventures seem to be temporary in nature since there is no competition where optimal contracts are used. Moreover, duration of joint ventures relies on the