Skip to main content
SpringerLink
Log in

Governing joint ventures: tension among principals’ dominant logic on human motivation and behavior

  • Original Paper
  • Published:
Journal of Management & Governance Aims and scope Submit manuscript

Abstract

We examine a neglected area in the joint venture literature—how parents’ dominant logic on human intent influences the JV control-performance relationship. Considering two well-developed theoretical perspectives, we suggest that when the decision-making team responsible for negotiating, formulating, and executing the JV agreement is driven by dominant agency logic they rely on a control structure that emphasizes formal mechanisms. In contrast, a parent driven by dominant stewardship logic emphasizes social mechanisms. We also explore the impact of dominant logic on JV performance to propose that effective and efficient goal attainment is higher for JVs governed by parents that share dominant stewardship logic than it is for those that share dominant agency logic. When logics conflict, issues of power arise such that the parents’ relationship and JV goal-related performance ranges from moderate to poor when power is asymmetrical and is consistently poor when parents of equal status battle to get their preferred and incompatible controls fully implemented.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. Dominant logic is considered distinct from the construct of organizational culture. Where organizational culture consists of a taken for granted organization-wide shared set of meanings, assumptions, values, and beliefs (Schein 1985), dominant logic reflects a top management team phenomena that may or may not eventually become an embraced way of thinking across the organization or integrated into the organizations member-inclusive culture.

  2. Studies also indicate that cognitive and emotional conflict are significantly related to each other and on average, negatively related to performance (e.g., DeDreu and Weingart 2003; Simons and Peterson 2000).

  3. We thank a reviewer for suggesting this term.

References

  • Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50, 179–212.

    Google Scholar 

  • Allen, N. J., & Meyer, J. P. (1990). Organizational socialization tactics: A longitudinal analysis of links to newcomers’ commitment and role orientation. Academy of Management Journal, 33, 847–858.

    Google Scholar 

  • Amason, A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: Resolving a paradox for top management groups. Academy of Management Journal, 39, 123–148.

    Google Scholar 

  • Arino, A., de la Torre, J., & Ring, P. S. (2001). Relational quality: Managing trust in corporate alliances. California Management Review, 44, 109–131.

    Google Scholar 

  • Arnold, J. D. (1993). When sparks fly: Resolving conflicts in your organization. New York: McGraw-Hill.

    Google Scholar 

  • Bacharach, S. B., & Lawler, J. L. (1984). Bargaining: Power, tactics, and outcomes. San Francisco: Jossey-Bass.

    Google Scholar 

  • Barney, J. (1990). The debate between traditional management theory and organizational economics: Substantive differences or intergroup conflict. Academy of Management Review, 15, 382–393.

    Google Scholar 

  • Barringer, B., & Harrison, J. (2000). Walking a tightrope: Creating value through interorganizational relationships. Journal of Management, 26, 367–403.

    Google Scholar 

  • Beamish, P. W., & Banks, J. C. (1987). Equity joint ventures and the theory of the multinational enterprise. Journal of International Business Studies, 18, 1–16.

    Google Scholar 

  • Block, P. (1996). Stewardship: Choosing service over self-interest. San Francisco: Berrett-Koehler.

    Google Scholar 

  • Blodgett, L. (1991). Partner contributions as predictors of equity share in international JVs. Journal of International Business Studies, 22, 63–78.

    Google Scholar 

  • Bodtker, A. M., & Jameson, J. K. (2001). Emotion in conflict formation and its transformation: Application to organizational conflict management. International Journal of Conflict Management, 12, 259–176.

    Google Scholar 

  • Brehmer, B. (1976). Social judgment theory and the analysis of interpersonal conflict. Psychological Bulletin, 83, 985–1003.

    Google Scholar 

  • Buchholtz, A. K., Amason, A. C., & Rutherford, M. A. (2005). The impact of board monitoring and involvement on top management team affective conflict. Journal of Managerial Issues, 4, 405–422.

    Google Scholar 

  • Child, J. (2001). Trust—the fundamental bond in global collaboration. Organizational Dynamics, 29, 274–288.

    Google Scholar 

  • Child, J., & Faulkner, D. (1998). Strategies of cooperation. Oxford: Oxford University Press.

    Google Scholar 

  • Child, J., & Rodrigues, S. B. (2003). Corporate governance and new organizational forms: Issues of double and multiple agency. Journal of Management and Governance, 7, 337–360.

    Google Scholar 

  • Child, J., & Yan, Y. (2003). Predicting the performance of international joint ventures: An investigation in China. Journal of Management Studies, 40, 283–321.

    Article  Google Scholar 

  • Coles, J., McWilliams, V., & Sen, N. (2001). An examination of the relationship of governance mechanisms to performance. Journal of Management, 27, 23–50.

    Google Scholar 

  • Collins, J. C., & Porras, J. I. (1997). Built to last: Successful habits of visionary companies. New York: Harper.

    Google Scholar 

  • Cullen, J., Johnson, J., & Sakano, T. (1995). Japanese and local partner commitment to IJVs: Psychological consequences of outcomes and investments in the IJV relationship. Journal of International Business Studies, 26, 91–115.

    Google Scholar 

  • Cullen, J. B., Johnson, J. L., & Sakano, T. (2000). Success through commitment and trust: The soft side of strategic alliance management. Journal of World Business, 35, 223–241.

    Google Scholar 

  • Dalton, D., Daily, C., Certo, T., & Roengpitya, R. (2003). Meta-analysis of financial performance and equity: Fusion or confusion. Academy of Management Journal, 46, 13–27.

    Article  Google Scholar 

  • Daniels, J., & Magill, S. (1993). Protection of competitive advantage in US/Asia-Pacific JVs from high-technology industries. In R. Culpan (Eds.), Multinational strategic alliances (pp. 167–183). New York: International Business Press.

    Google Scholar 

  • Das, T. K., & Teng, B. (1998). Between trust and control: Developing confidence in partner cooperation in alliance. Academy of Management Review, 23, 491–515.

    Google Scholar 

  • Davis, J., Schoorman, D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22, 20–47.

    Google Scholar 

  • De Dreu, C. K. W., & Weingart, L. R. (2003). Task versus relationship conflict, team performance, and team member satisfaction: A meta-analysis. Journal of Applied Psychology, 88, 741–749.

    Google Scholar 

  • Ding, D. (1997). Control, conflict, and performance: A study of US-Chinese JVs. Journal of International Marketing, 5, 31–45.

    Google Scholar 

  • Donaldson, L. (1990). The ethereal hand: Organizational economics and management theory. Academy of Management Review, 15, 369–381.

    Google Scholar 

  • Donaldson, L., & Davis, J. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management, 16, 49–64.

    Google Scholar 

  • Eden, D. (1984). Self-fulfilling prophecy as a management tool: Harnessing Pygmalion. Academy of Management Review, 9, 64–74.

    Google Scholar 

  • Eisenhardt, K. (1989). Agency theory: An assessment and review. Academy of Management Review, 14, 57–74.

    Google Scholar 

  • Eisenhardt, K., Kahwajy, J. L., & Bourgeois III L. J. (1997). How management teams can have a good fight. Harvard Business Review, 75(4), 77–85.

    Google Scholar 

  • Eisenhardt, K., Kahwajy, J. L., & Bourgeois III L. J. (1998). Taming interpersonal conflict in strategic choice: How top management teams argue, but still get along. In V. Papadakis, & P. Barwise (Eds.), Strategic decisions: Context, processes, and outcomes (pp. 65–84). Boston: Kluwer.

    Google Scholar 

  • Emerson, R. (1962). Power dependence relations. American Sociological Review, 27, 31–41.

    Google Scholar 

  • Fan, P. K., & Zhang, Z. K. (2004). Cross-cultural challenges when doing business in China. Singapore Management Review, 26, 81–90.

    Google Scholar 

  • Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading: Addison-Wesley.

    Google Scholar 

  • Fisher, R., & Ury, W. (1981). Getting to YES: Negotiating agreement without giving in, Boston: Houghton Mifflin.

  • Fox, M., & Hamilton, R. (1994). Ownership and diversification: Agency theory or stewardship theory? Journal of Management Studies, 1, 69–82.

    Google Scholar 

  • Fryxell, G. E., Dooley, R. S., & Vryza, M. (2002). After the ink dries: The interaction of trust and control in US-based international joint ventures. Journal of Management Studies, 39, 865–886.

    Google Scholar 

  • Geringer, M. (1993). Ownership and control in east-west JVs. In R. Culpan (Ed.), Multinational strategic alliances (pp. 203–220). New York: International Business Press.

  • Geringer, M., & Hebert, L. (1989). Control and performance of international JVs. Journal of International Business Studies, 20, 235–254.

    Google Scholar 

  • Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management Learning and Education, 4, 75–91.

    Google Scholar 

  • Ghoshal, S., & Moran, P. (1996). Bad for practice: A critique of the transaction cost theory. Academy of Management Review, 21, 13–47.

    Google Scholar 

  • Gulati, R., & Singh, H. (1998). The architecture of cooperation: Managing coordination costs and appropriation concerns in strategic alliances. Administrative Science Quarterly, 43, 781–815.

    Google Scholar 

  • Gupta, A., & Govindarajan, V. (1991). Knowledge flows and the structure of control within multinational corporations. Academy of Management Review, 16, 768–792.

    Google Scholar 

  • Hambrick, D. C., & D’Aveni, R. A. (1992). Top team deterioration as part of the downward spiral of large corporate bankruptcies. Management Science, 38, 1445–1466.

    Google Scholar 

  • Hambrick, D. C., Li, J., Xin, K., & Tsui, A. S. (2001). Compositional gaps and downward spirals in international joint venture management groups. Strategic Management Journal, 22, 1033–1053.

    Google Scholar 

  • Harbison, J., & Pekar, P. (1999). Harnessing the power of alliances and acquisitions. Directorship, 25(3), 6–9.

    Google Scholar 

  • Harrell-Cook, G., & Ferris, G. R. (1997). Competing pressures for human resource investment. Human Resource Management Review, 7, 317–341.

    Google Scholar 

  • Hartline, M. D., Maxham, J. G., & McKee, D. O. (2000). Corridors of influence in the dissemination of customer-oriented strategy to customer contact service employees. Journal of Marketing, 64, 35–51.

    Google Scholar 

  • Hatfield, L., & Pearce, J. (1998). Toward validation of partner goal achievement as a measure of JV performance. Journal of Managerial Issues, 10, 355–372.

    Google Scholar 

  • Hebert, L., & Beamish, P. (1997). Characteristics of Canada-based international joint ventures. In P. W. Beamish, & J. P. Killing (Eds.), Cooperative strategies: North American perspectives (pp. 403–427). San Francisco: New Lexington.

    Google Scholar 

  • Hendry, J. (2002). The principal’s other problems: Honest incompetence and the specification of objectives. Academy of Management Review, 27, 98–113.

    Article  Google Scholar 

  • Henley, A. B., & Price, K. H. (2004). The interdependency of task and relationship conflict over time. Academy of Management Best Conference Paper 1–6.

  • Hunt, S. D., & Morgan, R. M. (1994). Organizational commitment: One of many commitments or key mediating construct? Academy of Management Journal, 37, 1568–1588.

    Google Scholar 

  • Inkpen, A. C., & Currall, S. C. (1997). International joint venture trust: An empirical examination. In P. W. Beamish, & J. P. Killing (Eds.), Cooperative strategies: North American perspectives (pp. 308–334). San Francisco: New Lexington Press.

    Google Scholar 

  • Inkpen, A. C., & Currall, S. C. (2004). The coevolution of trust, control, and learning in joint ventures. Organization Science, 15, 586–599.

    Google Scholar 

  • Jehn, K. (1997). A qualitative analysis of conflict types and dimensions of organizational groups. Administrative Science Quarterly, 42, 530–557.

    Google Scholar 

  • Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305–360.

    Google Scholar 

  • Johnson, J., Cullen, J., Sakano, T., & Bronson, J. (2001). Drivers and outcomes of parent company intervention in IJV management: A cross-cultural comparison. Journal of Business Research, 52, 35–50.

    Google Scholar 

  • Johnson, J. L., Ellstrand, A. E., & Daily, C. M. (1996). Board of directors: A review and research agenda. Journal of Management, 22, 409–439.

    Google Scholar 

  • Kanter, R. (1994). Collaborative advantage: The art of alliances. Harvard Business Review, 72, 96–107.

    Google Scholar 

  • Killing, P. (1983). Strategies for JV success. New York: Routledge.

    Google Scholar 

  • Kumar, R. (1989). Affect, cognition, and decision making in negotiation: A conceptual integration. In M. A. Rahim (Eds.), Managing conflict: An integrative approach (pp. 185–194). New York: Praeger.

    Google Scholar 

  • Kumar, S., & Seth, A. (1998). The design of coordination and control mechanisms for managing JV-parent relationships. Strategic Management Journal, 19, 579–599.

    Google Scholar 

  • Kwon, S., & Weingart, L. R. (2004). Unilateral concessions from the other party: Concession behavior, attributions, and negotiation judgments. Journal of Applied Psychology, 89, 263–278.

    Google Scholar 

  • Lane, H., & Beamish, P. (1990). Cross-cultural cooperative behavior in JVs in LDCs. Management International Review, 30, 87–102.

    Google Scholar 

  • Lee, P., & O’Neill, H. (2003). Ownership structures and R&D investments of US and Japanese firms: Agency and stewardship perspectives. Academy of Management Journal, 46, 212–226.

    Google Scholar 

  • Leifer, R., & Mills, P. K. (1996). An information processing approach for deciding upon control strategies and reducing control loss in emerging organizations. Journal of Management, 22, 113–138.

    Google Scholar 

  • Lin, X., & Germain, R. (1998). Sustaining satisfactory JV relationships: The role of conflict resolution strategy. Journal of International Business Studies, 29, 179–196.

    Google Scholar 

  • Lorange, P. (1997). Black-box protection of your core competencies in strategic alliances. In P. W. Beamish, & J. P. Killing (Eds.), Cooperative strategies: European perspectives (pp. 59–73). San Francisco: New Lexington.

    Google Scholar 

  • Lui, S. S., & Ngo, H. Y. (2004). The role of trust and contractual safeguards on cooperation in non-equity alliances. Journal of Management, 30, 471–486.

    Google Scholar 

  • Madhok, A. (1995). Revisiting multinational firms’ tolerance for JVs: A trust-based approach. Journal of International Business Studies, 26, 117–137.

    Google Scholar 

  • Makhija, M. V., & Ganesh, U. (1997). The relationship between control and partner learning-related joint ventures. Organization Science, 8, 508–528.

    Google Scholar 

  • March, J., & Simon, H. (1971). The dysfunctions of bureaucracy. In D. Pugh (Eds.), Organization theory (pp. 30–41). Harmondsworth: Penguin.

    Google Scholar 

  • Mayer, R., Davis, J., & Schoorman, D. (1995). An integrative model of organizational trust. Academy of Management Review, 20, 709–734.

    Google Scholar 

  • McKenna, S. (1995). The business impact of management attitudes towards dealing with conflict: A cross-cultural assessment. Journal of Managerial Psychology, 10, 22–27.

    Google Scholar 

  • Mero, N. P., Guidice, R. M., & Werner, S. (2005). Accountability of agents: Beyond incentives and monitoring. Paper presented at the Annual Conference of The Academy of Management, Honolulu, HI.

  • Meschi, P. X. (1997). Longevity and cultural differences of international joint ventures: Toward time-based cultural management. Human Relations, 50, 211–227.

    Google Scholar 

  • Milgrom, P., & Roberts, J. (1990). Bargaining costs, influence costs, and the organization of economic activity. In J. E. Alt, & K. A. Shepsle (Eds.), Perspectives on positive political economy (pp. 57–89). New York: Cambridge University Press.

    Google Scholar 

  • Mills, P., & Ungson, G. (2003). Reassessing the limits of structural empowerment: Organizational constitution and trust as controls. Academy of Management Review, 28, 143–153.

    Google Scholar 

  • Mjoen, H., & Tallman, S. (1997). Control and performance in international JVs. Organization Science, 8, 257–274.

    Article  Google Scholar 

  • Muth, M., & Donaldson, L. (1998). Stewardship theory and board structure: A contingency approach. Corporate Governance: An International Review, 6, 2–28.

    Google Scholar 

  • Nooteboom, B., Berger, H., & Noorderhaven, N. (1997). Effects of trust and governance on relational risk. Academy of Management Journal, 40, 308–338.

    Google Scholar 

  • Ouchi, W. (1977). The relationship between organizational structure and organizational control. Administrative Science Quarterly, 22, 92–112.

    Google Scholar 

  • Ouchi, W. (1979). A conceptual framework for the design of organizational control mechanisms. Management Science, 25, 833–848.

    Google Scholar 

  • Pangarkar, N., & Klein, S. (2004). The impact of control on international joint venture performance: A contingency approach. Journal of International Marketing, 12, 86–107.

    Google Scholar 

  • Park, S., & Ungson, G. (1997). The effect of national culture, organization complementarity, and economic motivation on JV dissolution. Academy of Management Journal, 40, 279–307.

    Google Scholar 

  • Park, S., & Ungson, G. (2001). Interfirm rivalry and managerial complexity: A conceptual framework of alliance failure. Organization Science, 12, 37–53.

    Google Scholar 

  • Parkhe, A. (1993). Strategic alliance structuring: A game theoretic and transaction cost perspective. Academy of Management Journal, 36, 794–822.

    Google Scholar 

  • Pearce, R. J. (1997). Toward understanding joint venture performance and survival: A bargaining and influence approach to transaction cost theory. Academy of Management Review, 22, 203–225.

    Google Scholar 

  • Pearce, R. J. (2001). Looking inside the joint venture to help understand the link between inter-parent cooperation and performance. Journal of Management Studies, 38, 557–582.

    Google Scholar 

  • Perrone, V., Zaheer, A., & McEvily, B. (2003). Free to be trusted? Organizational constraints on trust in boundary spanners. Organization Science, 14, 422–439.

    Google Scholar 

  • Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7, 485–501.

    Google Scholar 

  • Rahim, M. A. (1992). Managing conflict in organizations (2nd ed.). Westport: Praeger.

    Google Scholar 

  • Schaan, J. (1983). Parent control and JV success: The case of Mexico, Unpublished doctoral dissertation, University of Western Ontario, Canada.

  • Schaan, J. (1988). How to control a joint venture even as a minority partner. Journal of General Management, 14, 4–16.

    Google Scholar 

  • Schein, E. H. (1985). Organizational culture and leadership. San Francisco: Jossey-Bass.

    Google Scholar 

  • Simons, T., & Peterson, R. (2000). Task conflict and relationship conflict in top management teams: The pivotal role of intragroup trust. Journal of Applied Psychology, 85, 102–111.

    Google Scholar 

  • Stathakopoulos, V. (1996). Sales force control: A synthesis of three theories. Journal of Personal Selling and Sales Management, 16(2), 1–12.

    Google Scholar 

  • Steensma, M., & Weaver, M. (2000). Attitudes toward cooperative strategies: A cross-cultural analysis of entrepreneurs. Journal of International Business Studies, 31, 591–609.

    Google Scholar 

  • Stopford, J., & Wells, L. (1972). Managing the multinational enterprise. New York: Basic Books.

    Google Scholar 

  • Sundaramurthy, C., & Lewis, M. (2003). Control and collaboration: Paradoxes of governance. Academy of Management Review, 28, 397–415.

    Article  Google Scholar 

  • Tetlock, P. (1985). Accountability: The neglected social context of judgment and choice. In B. M. Staw, & L. Cummings (Eds.), Research in organizational behavior (pp. 297–332). Greenwich: JAI Press.

    Google Scholar 

  • Thomas, K. W. (1992). Conflict and negotiation processes in organizations. In M. D. Dunnette (Eds.), Handbook of organizational psychology (pp. 651–717). Chicago: Rand-McNally.

    Google Scholar 

  • Tosi, H., Brownlee, A., Silva, P., & Katz, J. (2003). An empirical exploration of decision-making under agency controls and stewardship structure. Journal of Management Studies, 40, 2053–2072.

    Google Scholar 

  • Trice, H., & Beyer, J. (1993). The cultures of work organizations. Englewood Cliffs: Prentice.

    Google Scholar 

  • Wilkins, A., & Ouchi, W. (1983). Efficient cultures: Exploring the relationship between culture and organizational performance. Administration Science Quarterly, 28, 468–481.

    Google Scholar 

  • Williamson, O. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22, 233–161.

    Google Scholar 

  • Williamson O. E. (1993). Calculativeness, trust, and economic organization. The Journal of Law and Economics, 36, 453–486.

    Google Scholar 

  • Yan, A., & Duan, J. (2003). Interpartner fit and its performance implications: A four-case study of U.S.-China joint ventures. Asia Pacific Journal of Management, 20, 541–564.

    Google Scholar 

  • Yan, A., & Gray, B. (1994). Bargaining power, management control, and performance in United States-China JVs: A comparative case study. Academy of Management Journal, 37, 1478–1517.

    Google Scholar 

  • Yan, A., & Gray, B. (2001). Antecedents and effects of parent control in international joint ventures. Journal of Management Studies, 38, 393–416.

    Google Scholar 

  • Zajac, E. J., & Westphal, J. D. (2004). The social construction of market value: Institutionalization and learning perspectives on stock market reactions. American Sociological Review, 69, 433–457.

    Article  Google Scholar 

  • Zeng, M., & Chen, X. (2003). Achieving cooperation in multiparty alliances: A social dilemma approach to partnership management. Academy of Management Review, 28, 587–605.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Nevada Las Vegas, Las Vegas, NV, USA

    Rebecca M. Guidice

  2. AACSB-International, Tampa, FL, USA

    Neal P. Mero

Authors
  1. Rebecca M. Guidice
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Neal P. Mero
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rebecca M. Guidice.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Guidice, R.M., Mero, N.P. Governing joint ventures: tension among principals’ dominant logic on human motivation and behavior. J Manage Governance 11, 261–283 (2007). https://doi.org/10.1007/s10997-007-9029-2

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10997-007-9029-2

Keywords

Search

Navigation