Joint Venture Negotiation Research Articles

The evaluation of negotiation between shipping companies and port authorities under the application of the JVN-Box

In this article, we introduce the Joint-Venture Negotiation Box (JVN-Box), a new methodological approach to evaluate the negotiation between two players in a joint-venture partnership. The JVN-Box primarily calculates a suitable point of balance between two players and hence, generates harmony in a joint venture partnership. Since the division between players always depends on the opportunity cost and incentives in the process of negotiation, the study proposes the need for players to diligently engage in formal discussions to find the most suitable point of balance to consolidate a joint venture partnership. The JVN-Box helps to find that suitable balance point and hinges the success of any joint venture negotiation between shipping companies and port authorities on the effort of hard work by the weak player to step up and sacrifice welfare to step down from the stronger player.

An Alternative Quantitative and Qualitative Analytical Tool to Evaluate Joint-Venture Negotiations: The Joint-Venture Negotiation Box (JVN-BOX)

In this article, we introduce the Joint-Venture Negotiation Box (JVN-Box), a new methodological approach to evaluate the negotiation between two players in a joint-venture partnership. The JVN-Box primarily calculates a suitable point of balance between two players and hence, generates harmony in a joint venture partnership. Since the division between players always depends on the opportunity cost and incentives in the process of negotiation, the study proposes the need for players to diligently engage in formal discussions to find the most suitable point of balance to consolidate a joint venture partnership. The JVN-Box helps to find that suitable balance point and hinges the success of any joint venture negotiation between two players on the effort of hard work by the weak player to step up and sacrifice welfare to step down from the stronger player.

How Does the Joint-Venture Negotiation Box Work?

This research paper is interested in introducing a new methodological approach to evaluate a joint-venture negotiation between two players (or groups) respectively. Hence, this new methodological approach is entitled “The Joint-Venture Negotiation Box (JVNBox).” The primary objective of the JVN-Box is to calculate a suitable point of balance between two players for the generation of favorable conditions in a joint venture. Subsequently, the success of any joint-venture according to this research depends on the effort to work hard by the weak player and sacrifice welfare from the stronger player. In the Beginning, this study assumes that different players need to agree with some initial talks. In fact, both players can start a formal discussion to find the suitable point of balance in the process to consolidate a joint-venture. Nevertheless, the division between players always depends on the opportunity cost and incentives in the process of negotiation.

The Strategy Behind the Organizational Game: A Comparison between the Joint Venture Negotiation and the Venture Capital Investment Negotiation

Joint ventures and venture companies present examples of the incomplete contract for economists and the relational contract for legal scholars. Although they have different practical settings, they share the issue of how parties manage the incentive for cooperation. The parties’ ultimate goal is to achieve a situation where the parties can, reciprocally, monitor each other’s promise to cooperate and, at the same time, not distort the fellow party’s incentive to cooperate. They seek to create an optimal risk allocation by contract. Rational parties should be expected to combine sanction-supported and incentive-supported monitoring devices in a way that minimizes the risks of uncooperative behavior by the parties.There are two different types of risk. One concerns squeeze-out and the other concerns uncooperative behavior. Both will distort the incentive to cooperate. Therefore, each party must consider not only how to reduce the risk she faces, but also how to reduce the risk faced by her fellow party. Jointly optimizing the risk allocation maximizes the chances of successfully forming a contract and thereby generating the hoped-for synergy. The degree to which the risk can be reduced by contingent contracts, ex ante bargaining power and reputation is fixed before the game starts. These are essentially characteristics the parties bring to the table. Therefore, the game is about how to use equity sharing and monitoring contracts to generate cooperation.

A review of negotiation outcome: A proposal on delimitation and subsequent assessment in joint venture negotiations

Abstract In this study, we examine the outcomes of negotiation processes in joint ventures. Following a review of negotiation and strategy literature, we propose that satisfaction with the relationship created between partners is the most suitable indicator of negotiation outcome. This indicator is analyzed through the use of two parameters or variables: trust and uncertainty. The analysis is then used to bridge the gap that currently exists in the literature by proposing when a negotiation should be considered successful in joint ventures. One important conclusion of our study is that nonagreement should not always be valued in negative terms as in certain circumstances it can imply the most advantageous end to a negotiation. The scholarly and applied implications of our findings are discussed. Résumé Cette étude examine les résultats de la procédure de négociation dans les entreprises communes. Après une revue des publications sur la négociation et la stratégic elle montre que la satisfaction que les partenaires tirent de la relation qui existe entre eux est l'indice le plus approprié du résultat des négociations. Cet indice est analysé à partir de deux paramètres ou variables: la confiance et l'incertitude. En proposant un cadre pour les négociations réussies, l'analyse permet de combler une lacune dans les publications actuelles. L'une des conclusions majeures de l'étude est que le désaccord ne doit pas toujours être évalué négativement puisque dans certaines situations, il peut être l'issu le plus souhaitable. Nous terminons par un examen des implications académiques et pratiques de l'étude.

Cultural distance, investment flow, and control in cross‐border cooperation

AbstractPrevious research analyzing the impact of cultural distance on joint venture negotiations has often confounded firm and environment effects. To decouple these effects, the cross‐border cooperation preferences of small and medium‐sized Korean firms were studied, considering simultaneously firms involved in inward and outward investment ventures. While cultural distance showed no significant relationship with the degree of control sought over the cooperative ventures, cultural distance was significantly related with a preference for ventures in domestic or foreign markets. The impact of cultural distance was found to be greater in inward investment than in outward investment. Copyright © 2008 John Wiley & Sons, Ltd.

Compensation Options in Joint Ventures. A Real Options Approach

This research focuses on a cluster of dynamic reallocation and restatement of ownership clauses contained in joint venture agreements. These clauses, with potentially significant financial implications, govern the transfer of rights between the parties on two key financial issues: the allocation of profits and losses and the ownership interests in the joint venture. The central contribution of this research is to consider these clauses themselves as non-standard real options and to propose a methodology for assessing their values. Determination of such values will be essential throughout the joint venture negotiation process. In addition, we provide valuable information on another key question of managerial importance: estimating the downside risk of a clause so that the affected party can design a hedging strategy. Two actual case studies extracted from recent joint ventures have been used to stress the importance of these concepts and to develop suitable valuation techniques. The theoretical framework is based on real options methodologies. However, the clauses studied involve real options with non-standard features (compensation options and options with uncertain initial date). Therefore, we have developed ad hoc valuation models with user-friendly numerical examples in spreadsheet format.

Packages and Mitsubishi — International Joint Venture Negotiations

This case covers the negotiations between Packages Limited, Pakistan (Packages) and Mitsubishi Corporation, Japan (Mitsubishi) for the formation of a joint venture to produce Biaxially Oriented Polypropylene (BOPP) film in Pakistan. Packages was established in Pakistan in 1957 as a joint venture between the Wazir Ali Group and AB Auckerland and Rausing of Sweden. Packages manufactured paper and board and converted them to packaging products. Mitsubishi was one of the biggest conglomerates in Japan, operating internationally. In 1992, Syed Babar Ali, founder and advisor to Packages proposed establishing a joint venture with Mitsubishi, during his visit to Japan. Upon returning to Pakistan, he asked Packages' senior management to negotiate a joint venture agreement with Mitsubishi. Both Packages and Mitsubishi agreed in principle to establish a joint venture to manufacture BOPP film in Pakistan. In this case, the negotiation process was divided into three phases. The case describes the issue discussed and tactics employed by the two sides during the three phases. The major issues discussed included the price and capacity of the plant, the reimbursement of Mitsubishi's investment if the company suffered repeated losses, raw material supply from Mitsubishi, equity participation, and the control of the management and the board of the new company. In April, 1993, Mr. Javed Aslam, the Deputy General Manager of Packages, received a quotation of US $6.4 million for a 6000-ton plant from Mitsubishi Heavy Industries (MHI). He had to decide if it was feasible for Packages to go ahead with the joint venture with Mitsubishi and what counter offer to make to Mitsubishi Heavy Industries.

Choices in Joint Venture and Acquisition Negotiation Behavior: The Power‐Dependence Relationship

This paper tries to provide a theoretical explanation from case studies in which I analyzed the impact of firms’ behavior on negotiation processes. Particularly, it concentrates on the impact of the power‐dependence relationship on negotiation behavior choice in joint ventures and (nonhostile) acquisitions. Previous studies have found that negotiation behavior is a key factor in determining the results of negotiations and the subsequent implementation and performance of the strategy. Drawing on interview material from six cases, three acquisition negotiations and three joint venture negotiations, the empirical analysis allowed me to consider that the equilibrium situation of power‐dependence is more associated with integrative negotiation behaviors adopted by all the parties. This situation facilitates win/win agreements (negotiation success). However, the value‐creation basis appears as a key factor to be analyzed because its influence on (1) the perception of dependence and (2) the possible use of a power disequilibrium situation. This factor seems to be especially important in acquisition negotiations. Based upon my analysis, I recommend some issues to be studied and contrasted empirically in future research.

Joint Venture negotiation and managerial practices in the new countries of the former Soviet Union

Joint Ventures, formed by organisations from two or more countries, have become a widespread form of strategic alliance in the world economy. They offer unique benefits of integrating the complimentary skills of different organisations cross culturally, combined with quicker market access, and satisfying the host nation’s technological gaps. This paper concentrates on the important features of Joint Venture formation in the former Soviet Union; exploring the negotiation of Joint Ventures, including sources of potential conflict. Changing economic policies within the former Soviet Union gave rise to particular concerns about their current management system. Some managerial issues arising in the former Soviet Union system are examined, with recommendations for methods that Venture partners can employ to overcome these problems. The paper is illustrated by a case from the development of an oil field in Western Kazakhstan.

Knowledge and the Sequential Processes of Negotiation: A Markov Chain Analysis of Response-in-Kind

The impact of tactical knowledge on integrative and distributive response-in-kind behavior sequences and the ability to shift from distributive to integrative behaviors were examined using data from a prior study. Ninety dyads engaged in a multi-issue joint venture negotiation. Forty-five dyads were provided tactical knowledge and the other 45 were not. Markov chain analysis was used to test the hypotheses. A second-order chain best fit the data. Results showed that negotiators responded-in-kind to both distributive and integrative tactical behavior regardless of tactical knowledge. In line with Weick's (1969) “double interact” proposition of interlocked behaviors, negotiators with tactical knowledge were more likely to respond-in-kind to integrative behavior than were those without such knowledge, but only after their previous integrative behavior had been reciprocated. In addition, negotiators with tactical knowledge engaged in longer chains of integrative behavior (regardless of the behavior of the other party) than did negotiators without tactical knowledge; however, this only occurred after two integrative behaviors had occurred previously.

Toward a conceptual framework of international joint venture negotiations

Knowledge about determinants, processes, and outcomes of negotiation can help international business managers employ appropriate collaborative strategies that will result in maximum benefits. This article tackles a prominent issue in the dynamic, evolutionary process of international joint venture (IJV) development: contract negotiations during IJV formation. Building on a sociopsychological perspective together with transaction cost theory, this article presents an integrated conceptual framework on IJV negotiations in a general context where relevant antecedent, concurrent, and consequent factors are interlocked and mutually influential in sequence. It articulates three levels of antecedents of IJV negotiations (environmental, organizational, and individual), three core concurrent factors (term specificity, issue diversity, and contractual obligability, and three sequential consequences including the immediate outcome (IJV formation satisfaction), intermediate effect (IJV process performance), and ultimate effect (IJV overall performance). The interrelationships among them are proposed.

NEGOTIATION PROCESSES AND OUTCOMES IN PROSOCIALLY AND EGOISTICALLY MOTIVATED GROUPS

This experiment examined the effects of motivational orientation (prosocial versus egoistic) on interpersonal trust, negotiation behavior, amount of impasses, and joint outcomes in three‐person negotiations. Students participated in a joint venture negotiation, in which motivational orientation was manipulated by allocating individual incentives (egoistic motive) vs. team incentives (prosocial motive). Results indicated that prosocially motivated negotiators achieved more integrative agreements and fewer impasses, and reported higher trust, more problem solving, and less contending behavior than egoistically motivated negotiators. Hierarchical regression suggested that the finding that prosocial groups achieved higher joint outcomes can be explained by higher levels of trust, more problem solving behavior, and less contending behavior in prosocial groups.

Negotiating Joint Ventures in China: A Systematic Approach

SummarySince 1978, the successful implementation of the Chinese ‘Open Door Policy’ has contributed dramatically to the growth of direct foreign investment (DFI), in particular through joint ventures. However, foreign negotiators always find Chinese negotiations very difficult. The difficulties arise from the complicated Chinese legal framework, the lengthy negotiation process required and a frequent lack of understanding of guanxi by the foreign negotiators. The Chinese legal framework is a powerful and bureaucratic process which aims to scrutinize DFI. It subtly determines the multistage sino-foreign joint venture negotiation process. Specific strategies are required to successfully manage this process. Their effective implementation requires foreign negotiators to have good guanxi with their Chinese counterparts. Patience is another key to successful negotiation in China. Foreign negotiators must be able to manage their negotiations at both the organisational and the personal levels. Negotiation at the ...

The Role of Key Stakeholders in the International Joint Venture Negotiations: Case Studies from Eastern Europe

Recent literature has suggested that a key stakeholder may be able to shift the balance of bargaining power during a joint venture negotiation, and thus change the outcome of the process. This paper explores the role of central and eastern European transitional governments as key stakeholders, and how they influence international joint venture negotiations. This role is described and analyzed by examining eight dyads of western European and central/eastern European enterprises that have recently negotiated agreements. The findings suggest that transitional governments as key stakeholders intervene at different stages of the negotiation process, have both direct and indirect influences on the process, and that they can change the balance of power in the negotiations, sometimes to the detriment of their own state-owned enterprise.

Designing an International Joint Venture Negotiation Game

The success of developing a Joint Venture Simulation Game to model the common management problems encountered in the negotiation and management of an international joint venture is evaluated. The business simulation game was designed to communicate abstract concepts such as partner rapport, transfer price conflicts, and marketing disagreements to executives of state-owned agribusinesses in Indonesia. The study examines the actions of the Indonesian agribusiness executives during the game relative to the learning objectives.

Knowledge matters: The effect of tactical descriptions on negotiation behavior and outcome.

The impact of tactical knowledge on negotiator behaviors and joint outcomes was examined. It was hypothesized that the availability of written descriptions of negotiation tactics would provide negotiators with the knowledge necessary to apply in a mixed-motive negotiation and that, as a result, these negotiators would engage in different behaviors leading to higher joint outcomes than would negotiators without this knowledge. Ninety dyads engaged in a multi-issue joint venture negotiation: 45 dyads were provided tactical descriptions, and the other 45 were not. Dyads with tactical knowledge engaged in more integrative behaviors and achieved higher joint outcomes, with integrative behaviors serving as mediators of the knowledge-outcome effect. Distributive behaviors were found to be negatively related to joint outcome but were not influenced by tactical knowledge. Although negotiations occur every day, people often fail to reach agreements that maximize joint gain, even when negotiating simple conflicts (Neale & Northcraft, 1986; Pruitt, 1981; Raiffa, 1982). When agreements are reached, there are frequently other solutions that exist which could further benefit either or both parties. In more formal terms, negotiators often do not achieve Pareto optimal solutions on tasks with integrative potential. Although people often think they have done the best they could in a negotiation, they are frequently mistaken. The problem of suboptimal negotiated solutions has been examined from both cognitive (e.g., Carroll, Bazerman, & Maury, 1988; Neale & Bazerman, 1991 ) and social interaction perspectives (Lewis & Fry, 1977; Putnam & Jones, 1982; Putnam & Wilson, 1989; Schultz & Pruitt, 1978). Although separate examination of social and cognitive processes has provided insight into specific aspects of the negotiation process, the present research is unique in that it considers these processes concurrently and in the context of a general problem-solving framework. Viewing these processes as problem solving provides a unifying framework that explains negotiation processes principally in terms of knowledge being applied to tasks. In the current study, negotiator knowledge was influenced through the use of a simple intervention: We provided negotiators with written descriptions of negotiation tactics in an attempt to influence tactical behavior and quality of the agreement.

Joint ventures in hungary: Key success factors

This paper examines the contrasting experiences of three British companies in attempting to establish joint ventures in Hungary. The cases highlight some of the important ‘do's and don'ts’ of settingup joint ventures in previously centrally planned economies. Jim Hamill and Graham Hunt explain that the key to successful joint venture negotiations is sensitivity to the economic development needs of the host nation (e.g. technology transfer, modernisation, finance, training, etc.) without compromising the operating efficiency and profitability of the venture itself. Successful joint ventures can provide mutual benefits to both the foreign partner and host nation. In cases where major conflicts of interest arise, it may be better to break the courtship rather than enter into a troubled marriage.

On the process of negotiating a joint venture

Using a joint venture negotiation as an example, the negotiation process is examined from a very practical point of view. The background, the objectives and the planning and strategy for a negotiation are examined and suggestions are offered on the ‘dos and don'ts’ to follow during the negotiation process.

Influences on Sino-Western joint venture negotiations

This paper attempts to increase the reader's knowledge of the influences present when negotiating in China. The current environment of Sino-Western joint venture (JV) negotiations is examined, and negotiating suggestions resulting from this examination are presented. The paper, the result of the author's research in China in 1987–1989, posits that the major influences on Sino-Western JV negotiations are the ideological and theoretical foundations for such JVs, their history, the problems they experience, and the political, economic, governmental, and cultural contexts of negotiations. The paper's importance lies in two areas: it contributes to the literature on the international transfer of capital and technology, and it provides valuable information to Western firms and individuals who consider entering into JV negotiations in China.