A new approach for joint venture stakeholder analysis: the impact of a parent company's organisational dimensions on its project risk profile

Abstract

The joint venture (JV) form of business organisation has become a critical part of corporate strategy in worldwide markets, but its high failure rate presents a great challenge to potential investors. Using an inductive case study method, the authors explored the question of how the organisational structure of JV parent companies impacts the joint venture project’s risk profile. We found that there can be sub-units or individuals within an organisation whose goals are incongruent with the goals of the parent companies and their joint venture projects who can act against the JV project without consequence due to organisational injustice and agency issues. These sub-units can create risks and uncertainties and undermine cooperation and trust between the parent companies in the joint venture project. To increase the likelihood of success of future JV projects, the authors combined organisation, stakeholder, and agency theories to propose a conception framework in which parent companies were defined as the primary stakeholders and their functional departments as the secondary stakeholders. The JV project team can use this framework to analyse the organisation structure and control mechanisms of each parent company, to classify the functional departments and their employees as positive or negative secondary stakeholders, and to identify their impact on project risk and uncertainty.