Chris Styles and Lisa Hersch
Executive Summary
Although international joint ventures (IJVs) are becoming increasingly popular, they have relatively high failure rates. Managers report that these failures are often due to so-called softer issues that are related to the nature of the relationship between the partners. In this article, Styles and Hersch examine how to form IJVs successfully; they give particular attention to the relational, or behavioral, aspects of the process. They draw on relational exchange theory and focus on variables such as commitment and trust; in particular, they consider how different dimensions of these variables are associated with individual steps of the formation process.
Styles and Hersch collected data from seven IJVs involving Australian and Malaysian firms that operate in Malaysia. They conducted semistructured, in-depth interviews with senior executives from both partners and from the IJV itself, and they examined annual reports, IJV agreements, newspaper reports, company documentation, and Internet sites. They conducted within-case and cross-case analysis with the aid of the NUD*IST qualitative software package to reveal systematic patterns.
The data confirmed four propositions the authors derived from the extant literature. First, relationships progress through a series of stages: need determination, partner search, partner selection, negotiations, and operating the IJV. Second, there are four different dimensions of trust. Third, there are three different dimensions of commitment that are evident throughout the process; there are also different dimensions associated with different phases of the formation process. The authors present the process as a relationship development “road map.” Fourth, the authors find that IJV relationships are stronger when goodwill trust develops, when personal trust between partners increases because of increased interaction, when affective commitment develops, when the relationship exhibits extensive communication, and when there is no opportunistic behavior.
Styles and Hersch suggest that recognizing the different stages and the nature of the relationship at each stage enables managers to manage the formation process. Being told to develop trust or to be committed is not enough. Different stages require emphasis on different relational variables and different dimensions of trust and commitment. Without these building blocks, subsequent development is hampered. As with other aspect of business, relationships can be managed, and frameworks such as the development road map can assist this process.
Biography
Chris Styles is Professor of Marketing in the School of Business at the University of Sydney. He received his bachelor’s degree from the University of Western Australia and his doctoral degree from the London Business School. His areas of interest include international marketing, export marketing, international alliances, international entrepreneurship, and strategy. He has published in Journal of Services Marketing, Journal of Business Research, Industrial Marketing Management, International Marketing Review, and International Journal of Research in Marketing.
Lisa Hersch is a former honors student in the School of Marketing at University of New South Wales.
Journal of International Marketing, Vol. 13, No. 3, September 2005
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