Empirical test of a model for organizational governance structure choices in construction joint ventures

Abstract

In the construction industry, joint ventures (JVs) have become one of the major organizational forms utilized in large‐scale and international projects. Because of the complexity of JVs, the management of JVs is much more difficult than that of usual projects. Among various management challenges, the choice of organizational governance structure has a profound impact on JV success. A model for governance structure choices in construction JVs (CJVs) is tested. The governance structure model focuses on four major factors, namely, corporate cultural difference, trust, needs for procurement autonomy and motivation for learning, and is expressed in terms of four propositions, which are tested. We conclude from the econometric analysis results that the four model variables together explain about 53% of the variation of governance structure choices. Most important, all the four model propositions are strongly supported by the econometric analysis results and the sign of each coefficient is consistent with that in each proposition. Overall, the governance structure model is well supported by statistical testing, which complements previous case‐study‐based evidence.