Managing Joint Ventures

Managing Joint Ventures

download (5)by Paul W. Beamish and Nathaniel C. Lupton

Executive Overview
Joint ventures aid firms in accessing new markets, knowledge,capabilities,and other resources.Yet they can be challenging to manage,largely because they are owned by two or more parent companies.These companies may have competing or incongruent goals,differences in management style,and in the case of international business,additional complexities associated with differing government policies and business practices.We examine research on joint venture(JV)performance in order to identify prominent academic discussions established over the last 25 years.From this research,we draw implications from past research and areas for future research on successfully managing JVs,taking into account the decisions JV partners must make throughout the partnering process,from initial motivations through partner selection and negotiation of terms to implementation and ongoing management.Key implications include the necessity of honesty,trust,and commitment for the success of the JV,settling disputes by focusing on what is best for the JV rather than individual partner objectives,and division of managerial responsibilities according to the functional expertise of each partner.
Firms enter into joint venture (JV) agreements in order to create new products and services,enter new and foreign markets,or potentially both(Beamish, 2008).While foreign ownership restrictions that necessitated the involvement of a local partner previously have been eliminated in many countries,international JVs(IJVs)still make up a substantial proportion of foreign entry and investment.Equity JVs are legally distinct business units,owned by two or more partner firms.Parent firms may hold as little as a 5% equity stake in a JV although,in many countries,local regulators do not even recognize investments of less than 20% as giving investors significant influence.

Managing Joint Ventures

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