Conceptualization of Conflicts in Joint Ventures

Abstract

Many researchers have concentrated on diversified joint venture conflicts, rendering conceptualization of such conflicts difficult. This paper therefore reviews joint venture studies in order to develop a conceptual framework for joint venture conflicts. A conflict model, based on strategic and operational causes with respect to life cycle position and environmental influence from a dynamic perspective, is proposed. Conflict in joint venture (JV) is nothing new, on the contrary, it has been identified, discussed and analyzed in a great deal of JV literature (see e.g., Edström, 1975; Franko,1971; Koot, 1986; Matssura, 1989; Simiar,1983). Seventy percent of the partnerships in studies by McKinsey and Coopers & Lybrand eventually broke up, as well as half of those in Harrigan's sample, and a third of those in Franko's (Gomes-Casseres, 1987: 97). The presence of conflict, however, does not necessarily result in a breakdown. Instead, it is rather more common that ventures survive for many years, despite entanglement in a variety of problems during their lifetime. Finding joint ventures where some form of conflict does not exist may be difficult. Hyder (1988) reviewed a large number of JV studies and observed that more than 50% of these studies acknowledged the presence of either implicit or explicit conflict. By definition, joint ventures are created by different partners as independent organizations in order to exchange resources and facilities for mutual benefit through shared activities. The sharing of activity and facilities is in itself conflicting and parties involved in this process are for obvious reasons adhering to conflicting situations.