A of on How to Manage International Joint Venture Successfully - Literature review Example

An IJV represents a relationship between voluntary cooperative partner companies, in which these companies maintain their independence and objectives. However, in the frame strategic alliances, an antonym of cooperative behavior is opportunistic behavior, the latter being understood as mismatch of expectations and preferences (current or future) of one partner (Michael and Louis, 1989). Key moderating measures of opportunism are increased control over the IJV by members in order to receive a portion of fair income (Feya and Beamishb, 1999).

Discussion Among the various models of cooperation, international joint ventures are considered as the preferred mode of entry by firms (Reinier and Maria, 2009). However, the rate of failure of these organizational forms remains high. In addition, the IJVs are known for their fragility and their heterogeneous performance (Reinier and Maria, 2009). Several cases of IJV experience a failure due to the emergence of a conflict between the partners. Among these cases, we can cite the example of the partnership between the French group Danone and Chinese Wahaha established in the beverage industry (Pothukuchi et al., 2002). The two groups signed an agreement in 1996 to create a joint venture, Wahaha Joint Venture Company, with 51% owned by Danone and 49% owned by the Chinese partner.

After nearly a decade of fruitful collaboration, the relationship deteriorated and conflicts erupted in 2006. Indeed, Danone discovered that its partner violated non-competition clauses specified in the contract. The Chinese products are similar to those marketed by Danone. This conflict led the transfer in 2009 of shares in Danone joint entity with its Chinese partner. Studies on international joint ventures have dealt with various topics: the choice of partner, the formation of international joint venture, control mechanisms and inter-firm trust and the performance of the alliance.

Some of them are focused on the instability of IJV (Reinier and Maria, 2009) and particularly on the determinants that affect the outcome of this relationship. In contrast to our knowledge, a few studies have attempted to introduce management tools that can help enterprises to manage conflicts. In this context, the work of Mjoen and Tallman (2003) proposed a management tool change during the phase of post-merger integration and acquisition. The purpose of this article is to provide the first theoretical approach to educating managers of joint ventures to develop management tools to manage crisis conflicts.

These conflicts can occur throughout the formation process of IJV, hence the need to mobilize. Indeed, despite the large number of conflict researches and those on IJV crisis management, few of them are interested in bringing these two issues together (Mjoen and Tallman, 2003). It is in this context that our research will follow the following plan: firstly, this research focuses on the instability and conflict in the IJV and secondly, this research provides the tools of crisis management and discusses how to better manage the conflict within the framework of the partnership relations.

The International Joint Ventures and Conflict The Instability of International Joint Ventures The international joint venture is a form of alliance between companies involving creation of a new independent legal structure