Predicting Organizational Success within a Project-Based Joint Venture Alliance

Project-based joint ventures (a special type of alliance) are an often-used method to form competitive organizational structures in the global market; they allow participants to quickly assemble project-needed assets on a short-term basis without substantial investment. However, published discussions of joint ventures describe mixed success and focus on factors that affect the ventures after they are formed. This paper exposes factors, which may be observed at joint venture inception, that are predictive of organizational success within the joint venture. The survey research of U.S. architecture/engineering/construction (A/E/C) firms indicates that smaller partners in a joint venture experience more market growth and are more successful. Also, a firm with strength in legitimacy (client trust) is more likely to gain in short-term income but will likely suffer some long-term market loss in comparison to its less-legitimized partners. It is further concluded that culture match among partners plays a significant role in ensuring profitable joint venture returns.     

Risk Assessment for Construction Joint Ventures in China

The construction industry in China is developing toward the international procurement practice, and such development has attracted many foreign firms into the Chinese construction market through the formation of Sino-foreign joint ventures. Joint venture has become an important sector in the Chinese construction industry. However, the difference in management systems, technological practice, and cultural background among the partners within joint ventures brings difficulties to the function of joint venture. A significant degree of risk is involved in joint venture investments. Thus, foreign firms increasingly intend to spend more effort in studying proper strategies of managing risks in their joint venture businesses. Based on a survey, this paper establishes a risk significance index to show the relative significance among the risks associated with the joint ventures in the Chinese construction procurement practice. Real cases are examined to show the risk environment faced by joint ventures. The paper also investigates practical applications of risk management in the business of joint ventures.     

Performance in International Construction Joint Ventures: Modeling Perspective

This paper reports on a self-reported survey of performance in international construction joint ventures formed and operated by Australian and British contracting organizations. Based on previous studies, a questionnaire survey was developed to investigate the relationships between reported risk and success factors, and the performance of ventures. Through structural equation modeling, the paper empirically examines the effect of key processes such as partner selection, venture formation, and operation on venture performance. The results provide evidence that local partner attributes influence venture formation which, in turn, is strongly and positively related to its operation. These results also suggest that the negative impact of host government-related risks on venture formation is direct, while their impact on venture performance is indirect, through creating a “less certain” operating environment. Project-related risks appear to have strong and negative dual “direct and indirect” effects on venture performance. Based on these empirical results, the paper advocates that selecting a suitable complementary local partner and adopting a proactive risk management strategy are vital antecedents to successful venture performance.     

Using Analytic Network Process to Predict the Performance of International Construction Joint Ventures

Strategic collaborations such as joint ventures (JVs) have become an important way of exploiting business opportunities for construction companies. However, such entities are difficult to manage due to their composite structures, which entail diverse organizational cultures, styles, and objectives. Therefore, measurement of JV performance has been an interesting research topic although there is no consensus on the definition, measures, and variables of performance yet. Considering the inherent complexities of the construction projects, only an adequate combination of criteria allows assessing the international construction joint venture (ICJV) performance. Within this study, an analytic network process model is developed to examine the links between the determinants of performance and to observe the influences of these factors on the ICJV performance. As a result, interpartner relations, structural factors and interpartner fit are found to be the most important determinants of ICJV success. Effectiveness of conflict resolution and control mechanisms contribute significantly to ICJV performance. Cultural fit is the most important fit that should be attained between the partners. The performance of the model is tested on eight real construction projects and satisfactory results are obtained.     

Project Partnering: Improving the Likelihood of Win∕Win Outcomes

This article examines the potential benefits from management use of behavioral strategies in the development of successful trust-based and∕or trust-emulating partnering relationships, raises questions about existing beliefs regarding the development of trust-based relationships, and offers alternative recommendations for practices drawn from research in the areas of trust development and game theory. Key differences between cooperative behavior strategies and trust-based relationships are described. Three general categories of trust (evolutionary, spontaneous, and preexistent) and two different domains of trust (interorganizational and intraorganizational) are examined along with different issues and opportunities for management. The article concludes that (1) strategies of behavior can play critical roles in the development and maintenance of successful partnering relationships; (2) premature insistence on the presence of interorganizational trust as a precursor to collaborative behavior between owner and contractor may actually be fatal to the development of a successful partnering relationship; (3) enhancement of economic benefits in an already successful partnering relationship may be one special product of trust-based relationships; and (4) spontaneous and∕or preexistent trust may provide substantial but unpredictable benefits for partnering. Recommendations for management include increasing investment in project-long behavior monitoring, developing and implementing systems to feed back information for midproject relationship corrections, developing greater intraorganizational trust-based relationships, strengthening the decision-making capacity at the field level, and investing in additional personnel training with an emphasis on recognition of collaborative versus confrontational behaviors.     

Risk Management Model for International Construction Joint Ventures

The current Asian financial crisis has put the role of risk management in the construction business into focus. For firms engaging in the international construction business, one of the most effective means of mitigating financial risks is through a joint venture (JV) with a local partner. There are, however, risks associated with an international construction JV. Based on a study by the writers on the risk factors and their mitigating measures, the most effective risk mitigating measures were categorized into eight groups. These are partner selection, agreement, employment, control, subcontracting, engineering contract, good relationship, and renegotiation. In this paper, a risk management model incorporating these measures was proposed. Three cases of international construction JVs were analyzed from the perspectives of the execution of these measures. It is hoped that this model would help construction firms in improving their decision-making process for their overseas ventures.     

Implications of Culture in the Performance of International Construction Joint Ventures

Joint ventures have become popular because of their importance as a strategic alternative in global competition. One of the reasons why international joint ventures (IJVs) are difficult to manage is because the cultural distance between IJV partners has significant impact on alliance performance. Since construction projects are highly sensitive to external risks, the effect of the culture in the location in which the IJV operates is also significant. In this study, the effect of cultural similarity/difference relative to the national and organizational characteristics of partner companies on IJV performance is examined through a questionnaire survey. The impact of the cultural similarity/difference between an IJV partner and the host country is also assessed. The results of the study suggest that differences in organizational culture have a greater impact on IJV performance than differences in national and host country culture. The findings also reveal that similarity between the national cultures of IJV partners has a negative effect on IJV performance. The analysis of the data failed to provide evidence that IJV performance is affected by differences between the culture of the host country and the culture of an IJV partner.     

Effect of Partner Fit in International Construction Joint Ventures

Joint ventures have been an important research topic over the last few decades primarily because of their importance as a strategic alternative in global competition. Due to the inherent complexities of international joint ventures (IJVs), involving a mixture of different managerial systems, attitudes, and business strategies, such entities are very difficult to manage. In this study, the effect of strategic, organizational, and cultural fit between IJV partners and of interpartner relations on IJV performance is examined through a questionnaire survey. IJV performance is measured by means of two constructs: “project performance” and “performance of IJV management.” The results point out the significance of the quality of partner relations for a successful IJV operation. Findings of the study also suggest that the level of organizational fit between the partners has a moderate influence on IJV performance. It was observed that strategic fit between IJV partners affects interpartner relations extensively, which in turn affects IJV performance. IJV partners with compatible technical and managerial skills, financial resources, organizational size, workload, and project experiences are expected to achieve greater IJV success.     

Role conflict and ambiguity of CEOs in international joint ventures: A transaction cost perspective.

Insights from transaction cost economics were used to study the boundary conditions underlying the role conflict and ambiguity of 265 CEOs in Chinese-based international joint ventures. Role conflict and ambiguity were lower when the contract between parents was more complete. Contract completeness fully mediated the effects of parent objective gap and parent formalization on role ambiguity but only partially so in the case of role conflict. Role conflict was lower when the foreign parent was dominant in the venture but higher when the local parent was dominant. Role conflict and ambiguity were inversely related to cultural distance. Neither construct had a detrimental effect on international joint venture performance. Implications for role theory are discussed. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Toward a Multidimensional Performance Measure for International Joint Ventures in Construction

Measuring the performance of joint ventures has been an important research topic for a few decades. No consensus on an appropriate definition and measurement of performance of international joint ventures (IJVs) has yet emerged, and the validity of the underlying measures is still questionable. In this study, the construct validity of measures that define IJV performance in construction is evaluated using data obtained through a questionnaire survey. A second-order performance construct is proposed, which is measured by means of project performance, partner performance, performance of IJV management, and perceived satisfaction with IJV. The validity of the performance measures is evaluated by means of tests that assess content validity, reliability, and convergent and discriminant validity. The findings reveal that all proposed indicators are valid measures of IJV performance and that they correspond to different dimensions of performance. This research is expected to trigger further work on developing a multidimensional performance measure for IJVs in construction. In addition, the findings can help practitioners reflect on how they operate and measure the success of their IJVs.     

Enhancing Total Quality Management by Partnering in Construction

Total quality management (TQM) has increasingly been introduced into the construction industry across many countries as an improvement strategy, but there are many barriers impeding its effectiveness in implementation. Many researchers pointed out that partnering can facilitate TQM application, yet the quintessential nature on the linkage between the two techniques is still not clear due to a lack of rigorous verifiable empirical evidence. With support of the data collected from a survey of the Chinese construction industry, together with a case study of the Three Gorges Dam Project, this study reveals the mechanism of how partnering, associated with incentives, can enhance the implementation of TQM into the construction industry. It is concluded that partnering can enhance TQM largely due to enhancing the links across the boundaries of organizations within a trust environment; and the impacts of incentives on TQM are through both aligning strong motivations to encourage participants using the established links efficiently and aligning the necessary financial resources for participants to directly assist the investment on improving TQM. Further studies should be conducted to build optimum links and alignments among all project participants to ensure intraorganizational TQM activities are congruent with the interorganizational interactions, which require future project organizations to change in order to fit this.     

The influence of governmental policy on community health partnerships and community care networks: an analysis of three cases

This is a comparative analysis of hospitals' efforts in three communities to pursue collaborative ventures to advance community health. The events occurred over a two-year period characterized by increasing market competition and national debate about comprehensive health care financing reform. The study objectives are to better understand factors that contributed to the initiation of the collaborative efforts, and factors that sustained, hindered, or thwarted these efforts. The study explores how the collaborative ventures in these three communities fared in the face of multiple and conflicting policies and the simultaneous creation of larger, competing health systems. A number of concluding generalizations address the impact of interorganizational dynamics and public policy initiatives on community health partnerships.     

Contractor as Trust Initiator in Construction Partnering—Prisoner’s Dilemma Perspective

Partnering has been advocated for use in construction as a project-delivery approach to curb dispute and enable a cooperative contracting environment. Successful construction partnering is perceived to derive benefits to both developers and contractors. In view of significant implications to successful project delivery, there has been a surge of research and studies on construction partnering. These studies typically focus on the partnering process as well as the identification of critical success factors. Among the various success factors that underpin partnering success, establishing trust among partners is considered the most important. Moreover, skeptics have been swift to point out that establishing trust in construction is daunting. A better understanding of the role of trust and its manifestation in partnering efforts is therefore of both academic and practical value. In this study, motivating trust in construction partnering is described within the classic framework of “the prisoner’s dilemma,” which suggests the trust cycle can be kick-started if construction partners put cooperation before competition and self-interest. This paper reports a study that is designed to suggest a suitable candidate for the trust initiator. As such, the critical trust factors for two groups of construction partners in Hong Kong—developers/consultants and contractors—are first identified. It is found that “performance” and “permeability” of partners are the two most critical trust factors. “Performance” describes the partner’s competence and problem-solving ability as perceived by their counterpart. “Permeability” reflects the partner’s openness in sharing information. The result of a multiple-regression analysis further suggests that the contractor is in a position to initiate trust through competent performance and maintaining effective communication with the client. In this manner, the trust cycle can expand with reciprocal trustworthiness from the client.     

Risk Management in International Construction Joint Ventures

This paper identifies the risk factors associated with international construction joint ventures (JVs) from and “integrated” perspective. The risk factors are grouped into three main groups: (1) Internal; (2) Project-specific; and (3) External. It examines the most effective mitigating measures adopted by construction professionals in managing these risks for their construction projects in East Asia. Based on an international survey of contractors, it was found that the most critical risk factors exist in the financial aspects of JVs, government policies, economic conditions, and project relationship. When entering a foreign construction market in the form of a JV, a foreign construction company could reduce its risks if it would carefully select its local partner, ensure that a good JV agreement is drafted, choose the right staff and subcontractors, establish good project relationships, and secure a fair construction contract with its client.     

Interorganizational Teamwork in the Construction Industry

Interorganizational teamwork has attracted considerable attention over the years and is one of the characteristics of the construction industry. However, most of the research has just focused on the factors necessary for team success, rather than investigating human perceptions of interorganizational teamwork and what factors affect the individual’s perception that they are working in a team. Building on a modified model, the effects of cultural and context factors (individualism and power distance) and employee attitudes (task interdependence and trust) on team orientation (the individual’s perception of working in a team) were investigated in this research. Data were collected via questionnaire surveys from a sample of construction practitioners working in interorganizational project teams in Hong Kong. Using correlation and multiple regression analyses, the findings indicated that, as hypothesized, there were positive relationships between team orientation and contractual trust, competence trust and task interdependence, but there was a negative relationship between team orientation and opportunism. The results further suggested that the influence of team orientation was moderated to a certain extent by individualism and power distance in some employees’ attitudes.     

Strategic Management Practices in Turkish Construction Firms

This paper presents a study that aims to define the present position of Turkish construction companies in terms of strategic management. It is based on a survey measuring strengths and weaknesses in the “strategic management” practices of Turkish construction companies, and thus reveals potential opportunities and threats in a generalized manner. The results highlight the current strategic management practice of construction firms for designing their own future. Toward this aim, a detailed questionnaire was administered to 52 construction companies. The culture of companies and their perceptions of strategic management were shown to have serious shortcomings. However, specialization on different project types through joint venture companies established by their partners was found to be a major strength of many companies. These companies also pointed out the developing and unstable nature of both the political and economic structure of Turkey as their most significant threat. This disadvantage has inclined many firms to choose investment in the private sector as a response.     

Strategies Adopted by International Architectural, Engineering, and Construction Firms in Southeast Asia

There are many business opportunities for international architectural, engineering, and construction firms to work in Southeast Asia (SEA) due to its high volume of construction demand and its growing economy. Before entering the region, these industry practitioners need to decide on the appropriate market entry modes and business strategies. The objectives of this research are to investigate the effective market entry modes and business management strategies that industry practitioners can adopt for SEA projects. The research method is based on a structured questionnaire. The study found that the most effective market entry modes are: setting up wholly owned foreign subsidiaries and forming project joint ventures with local firms. The most effective business strategies are: providing a superior product or service and paying great attention to client satisfaction. It is recommended that industry practitioners place emphasis on customer satisfaction by considering all aspects of the client’s requirements and the proposed project’s usage throughout its intended life cycle, to differentiate itself from its competitors.     

Performance of International Joint Ventures in Construction

International joint ventures (IJVs) have become popular because of their importance as a strategic alternative in global competition. The measurement of the performance of IJVs has been an important research topic for a few decades, however there is no consensus on an appropriate definition and measurement of IJV performance. In this study, a model is proposed to assess IJV performance in construction. The validity of the proposed drivers and measures of performance is investigated and relationships between them are analyzed. The effects of interpartner fit/relations, structural IJV characteristics, host country factors, and project-related factors on IJV performance are examined through a questionnaire survey. IJV performance is defined by a four-dimensional construct that considers the performance of the project, the IJV partners, the IJV organization itself, and the perceptions of the IJV partners. The results point out the significance of the interpartner fit and the quality of partner relations for a successful IJV operation. The findings of the study also suggest that project-related factors have a moderate influence on IJV performance. In a properly designed IJV structure, partners with compatible skills, resources, and cultures are found to maintain good relations and are expected to achieve greater IJV success.     

Structural Equation Model of Trust and Partnering Success

The establishment of trust has been identified as the most critical factor that facilitates partnering success. As such, management should direct their efforts and energy to enhance trust effectively and systematically. It is hypothesized that partners’ trust level is positively related to their performance, permeability, and relational bonding and can be system based. This paper reports the use of the structural equation modeling technique to test this hypothesis. Project-based data on partnering success and the relative importance of the four trust factors were collected through a questionnaire survey, and the level of partnering success was assessed by the achievement of the preset project targets. The findings of the study support the hypothesized positive relationship between the partners’ trust level and partnering success. In addition, performance, permeability, and relational bonding were found to make significant contributions toward parties’ trust level.     

Model for Organizational Governance Structure Choices in Construction Joint Ventures

Due to the recent trend of utilizing joint ventures (JVs) in construction, construction firms are faced with the challenges in managing construction JVs. Among those challenges, the choice of organizational governance structure has a profound impact on JV performance, but receives little attention. The objective of this study is to investigate the choice of organizational design in construction of JVs and the underlying rationales of the choice. Through the theoretical lens that integrates both cost and resource perspectives, we develop a model that focuses on four major factors for determining governance structure choices, namely, corporate cultural difference, trust, needs for procurement autonomy, and motivation for learning. A case study of eight JVs in the Taiwan High Speed Rail project was conducted to empirically evaluate the proposed model. It is shown that the eight cases studied jointly replicate the linkage between the hypothesized determinants and the governance structure choices and reasonably support the proposed model.