Dylan Brown 

Conflict-performance relationships in international 

joint ventures 

The moderating effects of conflict resolution strategies 

 

 

 

 

 

 

  

Vaasa 2020 

School of Management  

Master’s thesis in Master’s of 

International Business 



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UNIVERSITY OF VAASA 

School of Management 

Author:    Dylan Brown 

Title of the Thesis:  Conflict-performance relationships in international joint  

                                                    ventures: The moderating effects of conflict resolution  

                                                    strategies 

Degree:    Master of Science in Economics and Business Administration 

Programme:   Master of International Business (MIB) 

Supervisor:   Tahir Ali 

Year:    2020     Pages: 116 

ABSTRACT: 

 

As international business continually becomes more viable for organizations around the world 

and international joint ventures (IJV) become increasingly more common in the business 

landscape, understanding what both drives them and hinders them is crucial. Moreover, since 

IJVs are fundamentally built upon a relationship between firms, comprehending the internal 

elements of conflict in IJVs and how this conflict affects the performance of these business 

unions are crucial. Although several studies have studied international joint ventures from a 

wide variety of different perspectives, no significant studies related to the moderating role of 

conflict resolution strategies pertaining to the conflict-performance relationship in IJVs have 

been undertaken.  

 

Thus, this study aims to help shine a light on the moderating impact of four distinct conflict 

resolution strategies, namely, problem-solving, compromising, forcing, and legalistic, on IJV 

conflict and the related metric of IJV performance. Accordingly, to help establish a strong 

literature-based understanding of relevant concepts, the theoretical portion of the thesis 

literature is reviewed addressing the denotational and conceptual backgrounds of conflict and 

performance in IJVs and the four aforementioned moderating variables. In this review and 

analysis of the existing literature, care was taken to ensure that the denotational underpinnings 

of the key issues of the study, including the relationship undergirding the conflict-performance 

relationship in IJVs, were thoroughly discussed and analyzed within the context of leading 

theories and literature in the field of IJV research. 

 

The empirical section of this study features responses gathered from a survey of 89 Nordic IJVs 

covering questions related to IJV conflict, performance, and each IJVs use of the four conflict 

resolution strategies. An SPSS regression analysis was conducted to test the five hypotheses 

formulated about the moderators and gain a better understanding of the nature of conflict and 

the moderating variables in IJVs. As a part of this analysis, the responses from the Nordic IJVs 

were divided into smaller subgroups of respondent IJVs that applied certain conflict resolution 

strategies and those that did not apply the strategies. By conducting the regression analyses and 

comparing the results between the two subgroups for each of the four strategies, results were 

calculated that gauged the impact of each moderating variable on IJV performance. Ultimately, 

the statistical results supported the presence of a negative relationship between conflict and 

performance in the IJVs observed, supported the positive impact of two moderating variables, 

and supported the negative impact of two other moderating variables on the dependent 

variable of IJV performance, thus demonstrating strong evidence in favor of the hypothesized 

moderating impact of the four conflict resolution strategies. 

 

KEYWORDS: International joint venture, Conflict, Performance, Conflict resolution strategies, 

Problem-solving, Compromise, Forcing, Legalistic. 



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Contents 

1 Introduction 8 

1.1 Background of the study 8 

1.2 Research questions and objectives of the study 11 

1.3 Delimitations of the study 14 

1.3.1 Point of view  14 

1.3.2 Theory  15 

1.3.3 Context  17 

1.4 Definitions of key terms and concepts 17 

1.4.1 International joint ventures 18 

1.4.2 Conflict  19 

1.4.3 Performance 20 

1.4.4 Conflict resolution strategies 20 

1.5 Previous studies 21 

1.6 Structure of the thesis 27 

2 Literature review 31 

2.1 Defining international joint venture (IJV) 31 

2.2 Motives of IJV formation and IJV characteristics 32 

2.3 IJV performance 35 

2.4 Different types and views of conflict 37 

2.4.1 Conceptualization of conflict 37 

2.4.2 Types of conflict 39 

2.4.3 Different views of conflict 40 

2.5 Conflict resolution strategies and theoretical roots  43 

2.5.1 Problem-solving 43 

2.5.2 Compromising 44 

2.5.3 Forcing 45 

2.5.4 Legalistic 45 

2.6 Conflict and performance relationships in IJVs  46 



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2.7 Moderating impact of conflict resolution strategies on the conflict-performance 

relationship  49 

2.7.1 Moderating impact of the problem-solving strategy                                     50 

2.7.2 Moderating impact of the compromising strategy 51 

2.7.3 Moderating impact of the forcing strategy 51 

2.7.4 Moderating impact of the legalistic strategy 53 

2.8 Hypotheses 54 

2.9 Framework of the study 58 

3 Methodologies 60 

3.1 Research purpose and methodological approach 60 

3.2 Dimensions of the study population 62 

3.3 Method of data collection and questionnaire development 65 

3.4 Survey specifics 67 

3.5 Analysis of the data 69 

3.6 Reliability and validity of the study 70 

4 Findings 72 

4.1 Description of the sample 72 

4.2 Empirical results 74 

5 Discussion 84 

5.1 Results related to the conflict-performance relationship 85 

5.2 Results related to the moderating factors 87 

6 Conclusions 92 

6.1 Theoretical contribution 93 

6.2 Managerial implications 94 

6.3 Limitations 96 

6.4 Suggestions for future research  98      

References 100 

 

 

 



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Figures 

 

Figure 1. Diagram of the thesis’ structure 30 

Figure 2. Conflict-performance relationship in IJVs with moderating influence from the 

conflict resolution strategies 59 

Figure 3. National distribution of Nordic IJV parent firms (Ali 2013: 108) 72 

Figure 4. Geographic distribution of IJV location (Ali 2013: 109)  72 

Figure 5. Scatterplot graph of R-squared linear regression for problem-solving  

subgroups 80 

Figure 6. Scatterplot graph of R-squared linear regression for compromising  

subgroups 81 

Figure 7. Scatterplot graph of R-squared linear regression for forcing subgroups 82 

Figure 8. Scatterplot graph of R-squared linear regression for legalistic subgroups 83 

 

 

Tables 

 

Table 1.  Relevant prior studies in the field of IJV research  25 

Table 2. Summarized of study hypotheses and empirical results                                         76 

Table 3. General IJV performance regression results with conflict and control variables 77 

Table 4. Relationship performance regression results by moderator variable subgroup 79 

 

  



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1  Introduction       

 

1.1  Background of the study 

In today’s increasingly modern and international business environment, the act of 

businesses globalizing and expanding beyond the borders of their home nation is 

becoming increasingly common. Of the many ways that a business may choose to 

internationalize, more and more businesses are electing to form international joint 

ventures (IJV) (Elo 2009). Although entering into an IJV business union can be of 

immense benefit for a firm, operating in an IJV can be complex (Nippa & Reuer 2019). 

For this reason, companies working with new entities across national and cultural 

borders as a part of an IJV’s operation are at high risk of encountering conflict (Nguyen, 

Larimo & Ali 2015; Shenkar 1990). Since such transnational business interactions 

continue to shape the contemporary commercial environment and can result in 

immense growth opportunities for both firms and nations alike, it becomes crucial to 

find and utilize methods of assuaging tensions between parties in IJVs.  

 

In this way, parties can strive to mitigate the risk and potential losses that may stem 

from a failed international joint venture. Such methods encompass a wide array of both 

traditional and novel approaches but continue to both define the contemporary climate 

of conflict management. Moreover, these methods also continue to shape how 

companies address major conflicts and concerns that can easily arise when doing 

business with counterparts that come from culturally, institutionally, and operationally 

disparate backgrounds, even among greenfield and acquisition-based IJVs (Newburry & 

Zeira 1997; Leeds 1997).  

 

Thus, as such conflict is ubiquitous within the field of international business, it is also 

imperative to understand the potential relationship that exists between the conflict and 

performance in international joint ventures and performance. Furthermore, as one 

investigates the extant conflict management approaches that have become staples of 



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modern international management, the need for definitive information regarding how 

conflict can shape a company and the way it operates within the context of performance 

becomes increasingly important. 

 

Delving further into the area of research regarding the relationship between conflict and 

performance in international joint ventures can also shed additional light on the topic 

(Fey & Beamish 2000). As companies from widely disparate cultural, social backgrounds 

begin to interact and build more comprehensive relationships with each other, conflict 

arising from these disparities often arises. In this respect, understanding more about 

conflict-performance relationships is unequivocally crucial for contemporary managers 

and businesses alike, as avoiding such problems can be the key to unlocking more 

successful business relationships. In exploring the relationships between the 

phenomenon of conflict in business and the related performance of international joint 

ventures, it is crucial to establish and understand what is meant in terms of conflict, the 

different forms of conflict management, the factors impacting performance, and the 

ways that such a performance is measured and affected by conflict. 

 

Another crucial point of consideration is that in the current body of literature in the field 

of international business and management, many sources have explored the meaning 

of conflict, the ways that conflicts arise and are resolved, and the related ideas of 

performance and control within international joint ventures (Habib 1987; Demirbag & 

Mirza 2000; Fey & Beamish 2000). However, there is a notable lack of detailed empirical 

research that expounds upon the potential relationships between conflict and 

performance in international joint ventures between firms, especially as the IJVs and the 

field of IJV research continue to change and evolve (Nippa & Reuer 2019). More 

specifically, different empirical studies in the current body of literature often present 

different conclusions related to the positive or negative nature of conflict in IJVs (Liu, Fu 

& Liu 2009; Hyder 1988; Chan, Luk & Wang 2005). This effectively creates ambiguity 

within the existing field of knowledge and may lead to confusion in practical business 

contexts. For this reason, to gain a better comprehension of such a crucial element of 



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modern international business, this study aims to ascertain the true nature of the 

conflict-performance relationships. 

 

Additionally, while many previous studies have focused on conflict or performance in 

international joint ventures, they often studied these phenomena within a context that 

often failed to explain and map potential patterns and links between conflict and 

performance and frequently studied these variables individually, as seen by the notable 

and oft-referenced studies by Ding (1997), Fey and Beamish (2000), and Habib (1987), 

among others. Furthermore, the number of potential moderating factors and the styles 

of previous studies have produced data that yields ambiguous findings that do not 

provide definitive conclusions surrounding conflict in international joint venture 

structures.  

 

In order to reconcile this outward lack of consistent data on the subject, this study aims 

to provide further empirical information and interpretations of conflict-performance 

relationships within the bounds of a theoretical framework which further explains and 

undergirds concepts related to how companies confront, assess, and manage conflict 

and performance in their respective firms. Moreover, in this context, one can establish 

a preliminary understanding of the phenomenon of conflict as a social phenomenon 

within the conflict of social exchange theory (Steensma, Barden, Dhanaraj, Lyles & 

Tihanyi 2008).  

 

Therefore, to gain a better understanding of the relevant types of conflicts and what 

effects they have on the ability of firms to perform in international business contexts, 

this thesis aims to present quantitative data in order to further explore the relationship 

present between these core factors of international business in IJVs.  In order to address 

the research gaps and extant issues in the field of business studies, this thesis aims to 

explore and quantify data about IJVs operating across the world and how their levels of 

performance are affected and shaped by conflict. Additionally, this study aims to 

incorporate the novel approach of considering moderating effects on the conflict-



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performance relationship in IJVs, which has not been investigated thoroughly in 

previous studies of IJV conflict. In this way, the context and core subject of this study 

takes the gaps and shortcomings of pre-existing studies in the field of IJV research and 

introduces moderating factors rooted in conflict resolution strategies to provide a 

unique facet and perspective to existing knowledge (Lin and Germain 1998; Lu 2006; 

Nguyen & Larimo 2011). In effect, this will help establish a clearer and more consistent 

portrait of the relationship between conflict and performance in IJVs while mapping how 

certain conflict resolution strategies affect this core relationship.  

 

1.2 Research question and objectives of the study 

Taking into consideration the background of the study and its purpose of facing a 

research gap that currently exists in the field of international business management, it 

is of paramount importance to ensure that the right research question and research 

goals are established from the outset in order to ensure that the quantitative data 

analyzed by the thesis can address the right issues. This is especially important when 

considering the outwardly complex and multifaceted phenomenon of conflict and IJVs, 

which is complicated further by the need to observe how such conflict affects IJV 

performance. Therefore, in order to get to the core of the concept being studied, the 

following research question was created for the thesis’ research: 

 

What is the impact of conflict on international joint venture (IJV) 

performance, and how do conflict resolution strategies moderate the 

relationship between conflict and IJV performance? 

 

The issues at the heart of this research question--including meaning and context of 

conflict, performance, and the strategies used to resolve conflict in IJVs will be 

investigated in the thesis’ study of Nordic IJVs and their experiences with conflict from 

a quantitative perspective. In this way, the research aims to yield clear interpretative 

results about conflict and performance in IJVs and a relevant answer to the question 



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posed for this research. Moreover, studying IJVs and the actions of multinational 

companies that engage in markets outside of the Nordic region and even outside of 

Europe will also provide further opportunities for substantive learning. In truth, as 

conflict and its effects on IJV performance are not geographically confined, a study that 

observes this phenomenon and contextualizes it within the field of existing knowledge 

should reflect this by studying an assortment of geographical areas (as seen in the 

research of this thesis).  

 

In this respect, to help achieve the goals established in addressing the research 

questions, an unambiguous research objective must be presented. After duly 

considering the requirements associated with answering the research question through 

theoretical and methodological approaches, the research objective was narrowed to the 

following: 

 

The primary objective of this thesis is to investigate the relationship 

between conflict and performance in international joint ventures with 

the moderating effects of conflict resolution strategies. 

 

Through proposing the aforementioned research objective, the process of 

addressing the main topic and query at the center of this thesis’ research can be 

more effectively guided to yield novel theoretical knowledge specifically 

pertaining to how IJV performance and conflict relate to one another within the 

confines of conflict resolution strategies, thus creating a distinction between this 

thesis and previous studies and literature in the existing body of research.  

 

Furthermore, to further elucidate the research objectives needed to ensure the 

presence of a detailed foundation for further theoretical findings and to provide 

for an adequately structured and focused thesis, four distinct sub-objectives 

were formulated to undergird the aims of the central research question, each of 



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which corresponds to a central goal of the thesis within the framework of its 

overarching arching aim to address the research question: 

 

1. To increase the understanding about the conceptualization, motives, 

characteristics, and performance of IJV 

2. To increase the understanding about the conceptualization of conflict and 

different views and types of conflict 

3. To explore the impact of conflict on IJV performance with the moderating 

effects of conflict resolution strategies 

4. To empirically investigate the conflict-performance relationship in 

international joint ventures with the contingent effects of conflict 

resolution strategies 

 

By establishing a framework in the form of clear, attainable sub-objectives, the study 

will be given a degree of completeness by the use of a straightforward approach to yield 

new insights about the conflict-performance relationship in IJVs. Additionally, an 

approach of interpreting results from a large number of employees from several Nordic-

based IJV participant firms also allows for the study’s objectives to be accomplished, for 

it allows for a better understanding of performance, conflict, moderating effects, and 

the overall conflict-performance relationship to be explored on an empirical basis.  

 

In this sense, as a whole the purpose and primary objective of the thesis revolves around 

its ability to develop the theoretical basis for a solid hypothesis pertaining to how 

conflict in IJV relationships affects IJVs and their performance while paying attention to 

moderating factors in the relationship; with the theoretical elements of the study 

developed, the thesis also aims to ensure that the hypothesis is tested against empirical 

data to gain further knowledge about the actual nature of the conflict-performance 

relationship in IJVs, as dictated by the available data. To accomplish this methodological 

portion of the study, data collected from Nordic participant firms in international joint 

ventures will be interpreted and analyzed statistically to produce a deeper quantitative 



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perspective to reach the core of the conflict-performance topic and associated elements 

which are vital to an understanding of this topic in the context of IJV relationships (e.g., 

moderating elements).      

 

1.3 Delimitations of the study   

In this section, the delimitations of the thesis are presented, thus establishing the scope 

and breadth of the thesis in terms of what the thesis’ study will and will not address in 

the research. In this way, a more solid body of data can be collected, as it allows for the 

thesis to reach the core of the research question while focusing on a more specific, yet 

relevant, subject.  

 

1.3.1 Point of view      

To effectively establish a relevant domain for the topic and the focus of this thesis’ 

research, it is of paramount importance to create a relevant scope for the research. This 

scope, which corresponds to the breadth of the research’s area of focus, is deeply 

connected to the study’s point of view, which is, in turn, tied to the theoretical 

underpinnings of the thesis. To properly map out the scope of the study’s point of view, 

it is necessary to clarify delimitations for the study’s scope. Thus, with regard to the 

thesis’ point of view, delimitations will be set which primarily limit the point of view of 

the study to a consideration of Nordic parent firms within IJVs (i.e., IJV parent firms that 

come from any of the Nordic countries).  

 

Therefore, this delimitation in terms of scope is targeted at restricting the geographical 

and cultural scope of the study; in this way, the study will be able to better focus on the 

Nordic region and the ways that firms from Nordic nations participate in and shape the 

IJVs that they are a part of. Additionally, this delimitation was added as it is relevant to 

another important consideration for this study’s research, namely, the accessibility of 



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data pertaining to Nordic IJVs (since data on these IJVs was available and useful to the 

purposes of this study).  

 

Another important proviso linked to these dimensions of the study’s delimitations is the 

fact that that while the focus of the study seeks to observe Nordic IJV participants, it 

also takes into account the IJVs as a whole, which, while also being composed of at least 

one Nordic parent, is also composed of other IJV partner firms from other nations and 

other continents. Accordingly, the underlying dimensions of this delimitation collectively 

relate to the scope of the research insofar as at least one participating partner firm in 

the IJV is from a Nordic country. This is especially relevant to the data utilized in this 

study, as the data utilized by this study is based on responses of individuals who work 

within their respective IJVs’ Nordic parent firms (Ali 2013).   

  

1.3.2 Theory     

When considering the dimensions of this study's delimitations through a theoretical 

lens, understanding the delimitations of the thesis with regard to the existing literature 

and theory, as well as how they will fundamentally shape the way that the study is 

structured and organized, is also imperative. Accordingly, the ultimate decision to 

structure the thesis with a clear emphasis on the theoretical roots of the study, thus 

ensuring that a review of the relevant theory behind the study would precede the 

methodological and empirical sections of the thesis, effectively preserving logical order 

and continuity within the text.  

 

Also, by structuring the thesis in this way, the thesis aims to abide by a theoretical 

delimitation to only include theories that are relevant to the phenomenon of topics of 

IJV conflict, conflict resolution strategies, and IJV performance, therefore helping to 

avoid the inclusion of irrelevant, extraneous theories that would add unnecessary 

confusion and convolution for those attempting to read and interpret the thesis. When 

viewed in aggregate, the underlying rationale for this delimitation is aimed at 



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simultaneously preserving the clarity and brevity of the thesis as a whole, while also 

providing the thesis with the theoretical underpinnings needed to offer a more critical, 

substantive view of the relevant issues relevant to conflict and performance in IJVs (e.g., 

IJV conflict/moderating effects and the nature of the conflict-performance relationship). 

In this way, the study at the core of this thesis will be able to yield useful, applicable 

knowledge instead of aimlessly discussing tangential arguments that fail to enhance the 

thesis.  

 

When discussing theories with regard to the study’s delimitations, it is crucial to 

evaluate how the theories of this study will be discussed through a lens that incorporates 

the core theoretical elements that differentiate this theory from other similar existing 

pieces of research and literature. Firstly, it is imperative to establish a relevant meaning 

for the social exchange theory, which will form a crucial element of the framework of 

the study and thus is germane to the delimitations of the study. Specifically, one may 

use the definitions proposed by Steenma et al. (2008) and Blau, who posits that the 

phenomenon of social exchange is composed of "voluntary actions of individuals that 

are motivated by the returns they are expected to bring and typically do in fact bring 

from others" (1964: 91).  

 

Likewise, the other complementary theory which is applicable to the moderating factors 

of the study and the theoretical delimitations of the thesis is game theory, as structured 

around the theoretical explanation presented by Rapoport (1974). This theory can be 

defined presenting its core tenets, which state that firms “select the best decision for 

themselves (from the point of view of results), their goal is therefore to obtain the 

maximum payoff (profit) and/or to minimize losses”, essentially leading to a zero-sum 

situation among conflict participants (Grzyl, Apollo & Kristowski 2019). This idea also 

links into the concept of the transaction cost theory of conflict, whereby firms entering 

into foreign markets (in the context of IJVs) and the means by which internal venture 

dynamics form are frequently influenced by the real and perceived transactions costs 

associated with participating in the venture and navigating the conflict which is often 



17 

inherent in such ventures (Hoon-Halbauer 1999; Jeffries & Reed 2000; Standifird & 

Marshall 2000). Collectively, these theoretical foundations are uniquely applicable to 

the delimitations of the study since the moderating factors are among the discernibly 

unique elements of the thesis’ study of IJV conflict and performance.   

 

1.3.3 Context     

As for concerns related to context, it is critical to guarantee that the firms analyzed in 

the study, along with the general situations investigated in the thesis’ study, revolved 

around firms that are operating in IJV environments. Moreover, it is important to limit 

the context of the study to business structures that exist between international firms, 

thus helping to ensure that the firms surveyed are actually engaged in IJVs, instead of 

the similar but distinct domestic JVs. This is especially relevant as the aim of the 

empirical portion of the study is specifically structured to observe and study the nature 

of conflict in international joint ventures, which are defined in the following sections. 

Collectively, such delimitations to the contextual nature of the thesis were central when 

the original surveys and questionnaires were drafted in order to collect the data utilized 

in the study, thus enabling the study’s data to possess a degree of contextual similarity 

among the 89 distinct IJVs observed (Ali 2013). 

 

1.4 Definitions of key terms and concepts    

In order to help to facilitate a more effective understanding of the key terms and ideas 

that undergird the theories, research, and findings of the thesis while aiming to address 

the core research question, it is necessary to elucidate any vague nomenclature 

inherently crucial to a study of performance, moderating factors, and conflict in IJVs. By 

putting forth a clearer denotational foundation for key terms, one may gain a superior 

competition of the relevant terminology before delving into existing theories and 

literature, as these definitions will likely help a reader to separate and faulty 



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connotational meanings of terms from the academic meaning that will be applied 

throughout this study.        

 

1.4.1 International joint ventures 

In this study of international joint ventures (IJVs) and their unique relationship with the 

phenomenon of conflict, it is of paramount importance to ensure that this concept is 

properly defined in a clear and straightforward manner. Moreover, to understand the 

joint venture, it is crucial to comprehend the joint venture. Using definitions and 

theoretical frameworks provided by Griffin and Pustay (1998), joint ventures can be 

considered as a unique business phenomenon wherein two or more parent firms enter 

into a business relationship by jointly establishing a novel business entity that is, by 

definition, legally separate from the aforementioned parent firms. In this respect, an 

international joint venture is the extension of this concept, except across national 

borders. In this way, an international element can be extended to this understanding of 

the joint venture while adding the theoretical foundation offered by Hennart (1988), 

who helps to expand the understanding of the IJV from a greenfield JV (i.e., a firm that 

is made “from scratch” by two parent companies) to that of the acquisition JV or 

corresponding IJV structure.  

 

In this way, an IJV can be understood to be either a separate entity made from two 

parent companies or when a firm acquires another firm in some amount, thus leading 

to the joint ownership of the business entity (Hennart 1988; Brouthers & Hennart 2007). 

Likewise, the internationality of an international joint venture is dependent on one or 

more of the aforementioned parent firms being from another country (and thus being 

of a different nationality). In this way, the home country of a particular IJV, for the 

purposes of this study refers to the country from which an IJV partner/parent comes 

from (e.g., the home country of a Finnish parent’s IJV established with another foreign 

firm in Finland would be Finland). Thus, the fulfillment of these prerequisites 

demonstrates the presence of an international joint venture.  



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1.4.2 Conflict 

As the concept of conflict is often used in a wide variety of business disciplines, it is 

unequivocally vital to narrow the broad meaning of conflict to a more specific 

phenomenon that meets the needs and scope of this thesis’ research. Specifically, one 

common association with conflict involves a more casual connotation of the term which 

often leads individuals outside of academic circles to associate the phenomenon of 

conflict with exclusively negative behaviors and consequences. However, in the case of 

this study, it should be emphasized that conflict does not explicitly refer to a hindering 

negative occurrence. Instead, for this study, an understanding of conflict will be drawn 

from the denotational and theoretical underpinnings established by Fey and Beamish 

(2000) and Hebert (1994), whereby conflict is a phenomenon that can be viewed as a 

phenomenon where the “actions of one parent prevent or compel some outcome 

against the resistance of the other parent” (Tsang, Nguyen & Erramilli 2004: 85).  

 

Thus, the idea of conflict can be presented as more of a natural, common occurrence 

within firms when they interact with their respective counterparts in the context of 

inter-firm relations. Moreover, since the previous definition effectively refrains from 

insinuating the benefit or harm directly associated with conflict as a phenomenon, it is 

a prime choice for the denotational foundation upon which the rest of the study can be 

based. As an addition to the aforementioned definition, conflict may also be deemed as 

a potential “catalyst for change”, effectively communicating its ability to stir stagnant 

systems and affect internal dynamics and inter-firm balances of power (Omisore & 

Abiodun 2014; Lehman & Linsky 2008: 3). In several respects, this study aims to more 

closely examine this element of the conflict-performance relationship in order to 

investigate the effect that conflict actually has on the performance of an IJV. As a result, 

it was crucial to avoid definitions that apply language related to the inherent nature of 

conflict that is categorical. 

 

 



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1.4.3 Performance 

Since performance is inherently an amorphous concept in the absence of more concrete, 

finite metrics, delineating what makes up performance, as it relates to IJVs when 

confronted with conflict, is crucial. Moreover, as firms in different industries and 

business sectors may perceive corporate performance in different ways, the greater idea 

of performance can be viewed as the degree that a parent in an IJV is content with the 

venture; specifically, this may relate to the opinion of the parent (and its staff) with 

regard to key metrics of the IJV’s operation, including profitability, market share, and 

even the achievement of objectives (Krishnan, Martin & Noorderhaven 2006; Lane, Salk 

& Lyles 2001). By utilizing this definition, the ability of IJVs to deal with (or potentially 

benefit from) conflict will be more easily measurable, comparable, and understandable, 

as the specific benefits that are relevant to IJV firms can be taken into consideration and 

judged through a subsequent quantitative interpretation of data between studied firms 

(i.e., as in the context of this study).  

 

The decision to utilize this approach when defining performance is partially motivated 

by the ability of this definition to remain adequately malleable throughout the thesis’ 

study while also helping to reconcile disparities in academic views pertaining to 

corporate performance and performance within IJVs. Additionally, since the research at 

the core of the study relies on the perspectives of IJV employees, a subjective approach 

which is congruent with the approaches taken by Ali (2013) and Ding (1997) in the study 

of IJVs, among others, and thus will be applied to this study's understanding of 

performance within the context of IJV performance (Geringer & Hebert 1991).  

 

 

1.4.4 Conflict resolution strategies     

Another vital term that will be used during this study of conflict and performance is that 

of the conflict resolution strategy, a prime example of a moderating effect that can 

shape the way that conflict impacts the performance of an IJV. In the context of this 



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thesis’ view of conflict resolution strategies and approaches, the term “conflict 

resolution strategy” will be defined according to the view of the strategies espoused by 

Lin and Germain (1998) and Lu (2006) and further expounded upon and studied by 

Nguyen and Larimo (2011). Thus, the concept of conflict resolution strategies can be 

defined as the tactics that companies may apply to tackle conflict that they may 

encounter; more specifically, these strategies can be conceptually divided into four core 

strategies, namely, problem-solving, improvising, forcing, and legalistic (Nguyen & 

Larimo 2011). Furthermore, due to the ability of these strategies to have the power to 

affect and influence the conflict-performance relationship in IJVs (depending on their 

application), these four strategies will form the backbone of the moderating factors 

which will be a core element of this study’s framework.  

 

1.5 Previous studies    

When assessing the modern field of IJV literature and contemporary academic research 

on the subject of IJVs, several authors over the years have advanced the business 

community’s general understanding of IJVs and their operations. This is especially true 

with regard to the phenomena of conflict, conflict management, and performance in 

IJVs. More specifically, a smaller subset of the larger group of IJV researchers has 

focused on researching the topics of performance and conflict, which are particularly 

germane to the subject of this thesis’ study. As a prime example of this specific subset 

of authors, Steensma and Lyles (2000) studied the survival of IJVs, while Ramaseshan 

and Loo (1998) undertook a study related to understanding the roots and drivers of IJV 

effectiveness, as perceived by IJV partners. Other works in this sphere of knowledge 

have been produced that deal specifically with the subject of conflict resolution among 

firms in partnerships, thus revealing insights about the central attributes of an IJV 

relationship and how they can be structured to produce more success in such a 

relationship. In a similar vein, other concepts relevant to the behaviors in IJV structures 

that encompass organizational conflict are expounded upon in the work published by 

Kauser and Shaw (2004).     



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Likewise, the article penned by Lin and Germain (1998), which is referenced and 

developed upon in later chapters of the thesis, similarly sought to explore the role of 

conflict resolution strategies (CRS) in the process of maintaining IJV relationships. As for 

studies related to the cultural impacts on IJVs, which are often a central consideration 

in IJV structures, the primary author in this sector is Lu Lung-Tan (2007), who 

investigated the impacts of cultural similarities on IJVs relationships. Relatedly, Kemp 

and Ghauri (1999) observed the effects related to partner conflict and the associated 

metric of performance in IJV structures. Moreover, this study focused on assessing the 

impact of partner symmetry, which is often an important component aspect of inter-

partner conflicts in IJVs, along with the concept of interdependence in JVs.  

 

Additionally, IJVs in China observed and compared empirically by Ding (1997), who 

studied elements of the IJV experience among international partners that are integral to 

the concepts of both conflict and performance. Beyond the aforementioned studies, 

additional efforts by Nguyen, Larimo, and Ali (2015) from recent years have also sought 

to explore a wide variety of organizational elements relevant to the use of conflict 

resolution strategies on IJVs (which is an important part of this study’s research 

question). As a final addendum, arguably one the most insightful and resourceful works 

with regard to this thesis' topic was written by Demirbag, Weir, and Mizra (2003); this 

article investigated inter-partner conflicts in IJVs (though this study was geographically 

limited to foreign parents of IJVs in Turkey).  

 

Another vital aspect is the organizational conflict theory, which forms an important 

theoretical backbone for a common understanding of conflict in IJVs is often used both 

directly and indirectly in the studies and findings of important sources in the field of IJV 

and conflict-related research, including Fey and Beamish (2000) and Putnam and Wilson 

(1982), respectively. In addition to such sources, a wide variety of other supporting 

literature from nearly a century of research of business-oriented organizational theory 

forms the backbone for other important studies of IJVs.  



23 

 

In effect, these theories further help to explain the reasons for conflict and its 

occurrence in IJVs. Additionally, these theories help to establish a link to the 

consequences that occur as a result of conflict between partners within IJVs; this is 

especially applicable when considering and exploring the conflict-performance 

relationship in IJVs, a central topic of this thesis. Although the theory tied to this element 

of IJV research is frequently applied to the interpersonal side of IJV operations and 

business, many concepts apply to the internal dynamics of international joint ventures, 

thus creating a viable opportunity to explain the complex inter-firm theories pertinent 

to IJV within the context of intra-IJV conflict (Westman & Thorgren 2016). 

 

When viewed within the context of the whole of the study and its theoretical 

framework, the decision to include these specific theories, along with other supporting 

theories, was motivated by the straightforwardness of the theories included. 

Specifically, by finding and incorporating theories that were direct, relevant, and clear, 

understanding the theories and their direct applicability to the study was made 

significantly easier. This was largely due to the fact that the links between different 

theoretical elements used (e.g., the links between the different types of conflict in IJVs 

and IJV performance) were clear. Likewise, these elements and their associated links 

had the potential of being exposited over the course of the thesis without convoluting 

the main objectives of the thesis.  

 

Furthermore, the existing literature and research which compose the current body of 

research also motivated the decision to select the foundational theories/concepts that 

were ultimately incorporated into the study and the literature review. This decision was 

also supported by the relevance of the theories since these theories appeared to be the 

most pertinent to the thesis’ aim of establishing a clear research gap and to deductively 

approaching current phenomena. In this way, the approaches used and the decisions 

made with regard to the underlying theories used to undergird the study’s framework 

sought to build on the foundation of common theories underscored in literature 



24 

commonly found in the field of international business and international joint venture 

research.  

 

Moreover, in this section, the relevant studies that address conflict, performance, 

and/or relevant moderating factors in IJV structures are presented tabularly in order to 

simply list who wrote the studies/literature (and when), what the focus of the particular 

study was, what the sample location was, the theoretical foundations of the study, the 

specific methodology and method of data analysis used, and the ultimate findings of the 

study. Likewise, connections were drawn to studies from which information was 

referenced or from which theories/concepts were directly or indirectly applied in these 

quantitative studies included below in Table 1.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



25 

Table 1. Relevant prior studies in the field of IJV research 

  

 

Author 

/ 

Year 

Focus of 

the 

study 

Sample 

location 

Theoretical 

roots 

Method

o-logy 

and 

sample 

size 

Method of 

data 

analysis 

Findings of 

the study 

Ding 

1997 

To study 

conflict 

and 

performan

ce in US-

China IJVs 

American 

firms in 

equity IJVs 

(located in 

China) 

Transactions 

cost theory 

(Hennart 1991); 

cooperation 

theory (Buckley 

and Casson 

1988); IJV 

control theory 

(Schaan 1983; 

Geringer and 

Hebert 1989) 

Questionn

aires to 45 

US-China 

JVs  

Truncated 

Tobit model 

analysis and 

correlation 

matrix 

Conflicts 

between joint 

venture 

partners 

significantly 

hinder joint 

venture 

performance 

Kemp 

and 

Ghauri 

1999 

To study if 

performan

ce in JVs 

decreases 

if conflict 

increases, 

what 

causes 

conflict, 

and norms 

Dutch 

partners 

operating 

with Dutch 

or foreign 

partners 

(60% in 

the EU 

15% in the 

USA and 

12% in 

South-east 

Asia) 

Social exchange 

theory (Blau 

1964); joint 

venture 

decision making 

theory 

(Geringer 

1988); partner 

interdependenc

-y theory 

(Powell 1990) 

Questionn

aire survey 

of 78 

Dutch in 

internatio-

nal joint 

ventures 

partners  

Two-step 

process with 

correlation 

matrix 

Conflict is not 

directly 

influenced by 

the 

interdepende-

nce 

asymmetry 

and does not 

influence the 

economic 

performance 

Demirba

g, Weir & 

Mirza 

2003 

To study 

the nature 

of 

relationshi

-ps (e.g., 

conflict, 

commit-

ent, co-

operation, 

trust) and 

implicatio

ns on IJVs 

Foreign 

parents 

from UK, 

Germany, 

France 

and 

Belgium 

(operating 

in Turkey) 

Inter-partner 

conflict theory 

(Habib 1987); 

performance 

theory 

(Geringer and 

Hebert 1991); 

inter-partner 

trust (Rotter 

1967; Madhok 

1995); cultural 

distance 

(Hennart and 

Larimo 1998) 

Questionn

aires with 

frequency 

scales of 

47 IJVs 

Regression 

analysis with 

Cronbach’s 

alpha 

coefficient  

There exists a 

strong 

connection 

between the 

nature of 

relationships 

and 

performance; 

i.e., handling 

conflict can 

improve 

relations/perf

ormance 



26 

Steensm-

a and 

Lyles 

2000 

To 

understan

d and 

explain 

the 

different 

factors in 

the 

organizati

onal 

dynamics 

of IJVs 

survival 

IJVs 

located in 

Hungary 

(foreign 

parents 

come from 

outside of 

Hungary) 

Social exchange 

theory (Thibaut 

& Kelley 1959); 

parental 

conflict theory 

(Lyles and Salk 

1996) 

Personal 

interviews 

with 

participant

-s from 

121 IJVs 

Mplus linear 

regression 

modeling and 

probit 

analysis 

Strong parent 

support is 

useful in 

assuaging 

conflict and 

an imbalance 

in control in 

IJVs (e.g., in 

conflict 

situations) 

can lead to IJV 

mortality. 

Nguyen, 

Larimo 

and Ali 

2015 

To 

understan

d the 

impact of 

cultural 

distance, 

age, 

control, 

and the 

use of 

conflict 

resolution 

strategies, 

on IJVs  

Nordic 

partners 

(i.e., 

Denmark, 

Finland, 

Sweden, 

and 

Norway) 

operating 

overseas 

Conflict 

resolution 

strategy (CRS) 

theory (Lin & 

Germain 1998; 

Lu 2006); 

foreign control 

theory (Makino 

& Beamish 

1999) 

Questionn

aires from 

89 Nordic 

IJV 

partners 

Binomial 

logistic 

regression 

Regarding the 

CRS, the 

problem-

solving and 

compromising 

have a 

positive 

relationship, 

while forcing 

and legalistic 

strategies 

have a 

negative 

relationship, 

with IJV 

performance.  

Ramases

-han and 

Loo 1998 

To 

understan

d the 

factors 

that 

impact 

how IJV 

partners 

perceive 

performan

ce 

Internatio

nal IJV 

partners 

located in 

Singapore 

Inter-

organizational 

theory (Cook 

1977); 

organization 

theory (Morgan 

& Hunt 1994) 

Likert scale 

questionn

aires to 

162 IJV 

partners 

from 

Singapore 

Multiple 

regression 

analysis 

Communicati

on improved 

perceived 

performance; 

dysfunctional 

conflict is 

detrimental; 

power 

imbalances 

diminish 

performance 

Fey and 

Beamish 

2000 

To study 

and 

understan

d the 

underpinn

ings of 

conflict in 

IJVs 

IJVs 

between 

foreign 

firms (e.g., 

from the 

USA, 

Finland, 

and UK) 

and 

Russian 

firms 

Social exchange 

theory (Blau 

1964); conflict 

theory (Pondy 

1967); social 

conflict theory 

(Coser 1956); 

social unit 

theory of 

conflict 

(Barnard 1948) 

Interviews 

with 40 

IJVGMs 

(i.e., 

general 

managers 

in IJVs) 

Nonparametr

-ic regression 

Managers 

should 

monitor/ 

control the 

harms of 

conflict and 

more similar 

firms 

generally 

experience 

less conflict. 



27 

Kauser 

and 

Shaw 

2004 

As 

understan

d the 

impact of 

organizati-

onal 

characteri-

stics (e.g., 

conflict) 

on IJV 

success 

US, 

European, 

and 

Japanese 

IJV 

partners in 

Britain 

(i.e., in 

IJVs with 

British 

firms in 

Britain) 

Resource 

dependency 

theory (Pfeffer 

& Salancik 

1978); 

transaction cost 

theory 

(Anderson & 

Weitz 1992); 

organizational 

structure 

theory 

(Chandler 

1962); Control 

theory 

(Geringer & 

Hebert 

1989);  organiza

-tional 

interdependenc

e theory (Aiken 

& Hage 1968) 

Questionn

aires from 

114 

responden

-ts 

Regression 

analysis 

Conflict has a 

significant 

hindering 

impact on the 

performance 

of IJVs. 

Approaches 

rooted in 

trusting 

approaches 

are more 

effective in 

bettering IJV 

performance.  

 

 

1.6 Structure of the thesis 

As a whole, the thesis is divided into six distinct chapters, each of which aims to fulfill 

the central research questions and reveal insights about the topic of conflict and 

performance in IJVs. The first chapter (i.e., the introduction) of the thesis is aimed at 

presenting the thesis and the associated vital elements of the thesis, including the 

research gap and the way in which the study aims to occupy the niche established by 

the research gap, thus following the CARS model of introducing the topic of the rest of 

the thesis along with why it is relevant for a study (Feak & Swales 2011). Additionally, 

the introduction of the thesis features the research question and relevant research 

objectives of the study, which will help to guide later stages of the work in the right 

direction. Subsequently, delimitations and the general scope of the study are covered, 

thus granting a reader a better understanding of what the study will and will not be 

addressing within the context of the thesis’ study.  

 



28 

Following this, the introduction enumerates several key terms that are to be used in the 

rest of the thesis by clarifying the underlying fundamental meanings and separating 

common connotations associations from the denotations to be used in this study. 

Likewise, relevant studies from the existing body of literature on the relationship 

between conflict and performance in IJV business structures are presented in the form 

of a table in order to make the comparison between relevant sources more easily 

accessible and comprehended by observers. Finally, the introduction is concluded by a 

summation of the thesis’ structure.  

 

In the thesis’ literature review, a more detailed inspection of the underlying theoretical 

framework of the thesis will be established in order to prepare the entire study for the 

methodological portion of the thesis and the subsequent discussion of findings and 

conclusions from the study. Specifically, the literature review seeks to help present a 

more relevant and descriptive definition of what an international joint venture is as well 

as the reasons for why they are formed and what their general characteristics and 

defining features are, thus providing important background for a discussion of the 

thesis’ topic. Afterward, a more in-depth analysis of the phenomenon and metrics of IJV 

performance will be provided; this is followed by a transition into the discussion of 

conflict in its many forms and the perspectives associated with conflict, presented in this 

literature review through conceptualization.   

 

After an analysis of conflict, the moderating effect of conflict resolution strategies and 

its theoretical roots are presented to ensure that the concept has an adequate 

foundation before being incorporated further into the methodological portion of the 

thesis’s study later on in the methodological section. In particular, this theoretical 

discussion of conflict resolution strategies will cover the concepts of problem-solving, 

compromising, forcing, and legalistic components of conflict resolution to develop the 

most fleshed out collective conceptualization of conflict resolution strategies.  

 



29 

Following these discussions will be a theoretical review of conflict and performance 

relationships in IJVs, which will then be followed by a discussion of the moderating 

impact that the aforementioned conflict management strategies have on the conflict-

performance relationship, thus linking together the previous parts of the literature 

review and creating the main theoretical support which will undergird later portions of 

the thesis. To conclude the literature review, the framework of the study will be 

presented, effectively establishing a transition from the more theoretically oriented 

literature to the empirically oriented methodologies section of the paper.  

 

In the subsequently empirically focused portion of the thesis, the methodologies section 

will center on presenting the means for which the core study of the thesis will be 

established, including illustrating the data set, the means by which the quantitative 

study will be conducted, the statistical aims of the study (in terms of what elements are 

being tested when running statistical tests on the data), and other aspects of the study 

relating to the research approach, the strategy of the research, and the general method 

of the research. Likewise, here certain statements about the validity and reliability of 

the underlying data of the study will be offered.  

 

Following these elements, the subsequent chapter, which will address findings and an 

associated discussion of the contextual implications and considerations of relevant 

findings, will take a more critical look at what the methodological section yields with 

regard to the study’s data, thus allowing the thesis to transition into its final section, 

conclusions. In this final section, the managerial applications and theoretical 

contributions will be presented as the insights gleaned and relevant knowledge acquired 

from this thesis’ look into the conflict-performance relationship in IJVs are evaluated. To 

further illustrate the structure of this thesis visually, a diagram is provided below: 

 



30 

 

 

Figure 1. Diagram of the thesis’ structure  

 

 

 

 



31 

2  Literature review  

 

2.1.  Defining international joint venture (IJV)  

Before delving into a discussion of conflict, performance, and the conflict-performance 

relationship in IJVs, it is first necessary to establish what an IJV is within a theoretical 

context; throughout this process of defining and conceptualizing the concepts relevant 

to this study, the four sub-objectives will act as a guide to lead the path of the literature 

review in a way that helps to undergird the study while also answering the research 

question at the heart of the thesis. To accomplish these goals, one can define an IJV 

using established literature to help explain what such a business structure truly is. In the 

context of this study, one may apply the early stated sources, namely, Hennart (1988) 

and Brouthers and Hennart (2007), to reach the conclusion that an IJV is either a 

separate entity made from two parent companies from different nations or when a firm 

acquires another firm across borders in some amount, thus leading to an ownership 

structure of the business entity that is joint.  

 

By utilizing this denotational approach throughout the theoretical framework and 

foundation of this thesis, it is important to highlight how Hennart along with Brouthers 

and Hennart acknowledge the presence of an existing dichotomy in IJVs. Specifically, this 

dualism focuses on greenfield and acquisition-based IJVs, whereby an IJV is created by 

parent firms from nothing and where it is created through the acquisition of another 

pre-existing business, respectively. This approach to defining the central business 

concept of the IJV was chosen due to its ability to effectively encompass nearly all 

international joint ventures found in the current market and, more specifically, the types 

of IJVs which are relevant for the study at the heart of this thesis. In this way, these 

definitions provided enough specificity and a sufficient level of flexibility to aid the thesis 

in reaching meaningful conclusions as to the nature of conflict and performance in the 

context of IJVs.  

 



32 

2.2.  Motives of IJV formation and IJV characteristics 

In addition to exploring an applicable definition of the term international joint venture, 

it is also vital to explain why IJVs form in the first place and what some of their defining 

characteristics are that allow researchers to identify IJVs and their usual behaviors. By 

investigating these elements, one can gain a better understanding of the ideas described 

in the following sections of the literature review, which are greatly shaped by how 

participant firms within IJV structures interact with each other behave in their respective 

business unions. In this way, a more meaningful understanding of the specific firms 

involved in the thesis’ study can be gleaned as understanding the typical motives behind 

the creation of inter-firm IJV relationships and their usual defining features can make 

the establishment of conclusions from data (i.e., in the specific case of this thesis data 

set) clearer.  

 

In several aspects, the reasons motivating the creation of an IJV relationship may be 

manifold for each of the parties involved in the IJV. For example, as elucidated by 

Parameswar, Dhir, and Ongsakul, firms may be motivated to form IJVs because of the 

pursuit of resources, capital, novel markets, and/or strategic assets (2018). Moreover, 

the desire to gain access to these crucial business elements may be motivated by these 

elements seems increasingly motivated by the need to compete in an increasingly 

international and demanding business climate in which firms must be cognizant of their 

shortcomings and attempt to overcome them, especially in highly internationalized 

sectors where competitors are abundant.  

 

This reality is further underscored by the stated needs of IJV participant firms studied by 

Tatoglu and Glaister, who found that IJVs are frequently formed by the desire to expand 

and be present in new markets, the need to gain more rapid entry to valuable markets, 

and to ensure superior quality, namely, through “adequate quality control” (2000: 66). 

Further reasons behind the formation of IJVs, as presented by Tatoglu and Glaister, 

revolve around economic needs that, in addition to helping firms compete, can 

streamline their operations and guide their financial development in ways that they may 



33 

not have been able to do individually. For instance, many firms elect to form IJVs to take 

advantage of economies of scale, quicker pay-back (Tatoglu & Glaister 2000). Likewise, 

one would be remiss to ignore the value of resources and access to unique capabilities 

in the IJV relationship, though it is crucial to point out that vital resources that enable a 

firm’s successes to extend far beyond the physical and tangible are invaluable elements 

of the IJV equation. For instance, the aforementioned 2000 study illustrates that the 

acquisition of greater usage capacities and resources was a crucial reason for the 

formation of IJVs; also, licensing, patents, legal support/protection, and knowledge were 

all vital resources for IJV participants (Tatoglu & Glaister 2000).  

 

Collectively, the aforementioned reasons generally point to the need for firms to 

develop and grow in the face of greater external competition and international struggle 

for clients and market prominence. Though this desire for a chance to become more 

prominent in relevant market spaces may imply a level of desperation from IJV 

participant firms, it is important to add that many large, well-established firms also 

pursue the IJV route, as evidenced by how strong firms often find similarly strong 

international counterparts to grow their dominance across national borders 

(Parameswar, Dhir & Ongsakul 2018).  

  

Furthermore, in terms of the general characteristics of IJV, one can look to previous 

analyses and studies to gain a better sense of the defining features of the inter-business 

structure. As revealed by a detailed study of IJVs by David De Matías Batalla, IJVs are 

frequently defined by the cultural phenomena which shape the interaction between the 

international firms. For example, cultural distance is a common characteristic of IJVs, as 

participant firms often come from culturally disparate home regions, thus creating an 

environment within the IJV structure that breeds a sense of disparity between the two 

firms. The difference in views and cultural norms between IJV partners (which is 

compounded by the internationality of an IJV when compared to its domestic 

counterpart, the joint venture), means that certain forms of conflict and/or 

disagreement may arise from this cultural distance. (De Matías Batalla 2014)  



34 

 

Likewise, De Matías Batalla emphasizes that among the more ostensibly hindering 

characteristics of international joint ventures is the level of incompatibility between IJV 

participant firms, which can be both caused and exacerbated by communication 

problems between the participant firms. Moreover, as firms must adapt to a new style 

of cooperation in which risks, rewards, and processes are shared, a loss of autonomy 

may be perceived by firms in IJVs; this is often seen alongside the confusion of 

hierarchies and roles in IJVs, especially when responsibilities are blurred over time as 

the needs of firms in the IJV change and the positions of firms relative to one another 

within the IJV becomes ambiguous (though this is not a universal experience of IJVs). 

(De Matías Batalla 2014) 

 

However, to further clarify the dimensions that often characterize IJV structures, one 

may divide such characteristics into three distinct categories, namely, ownership, 

internationality, and acquisition status. Beginning with ownership as a characteristic, 

certain IJVs may possess structures in which partners/parents own the IJV firm to 

different degrees. For example, a firm may possess a minority ownership share of the 

IJV or a majority ownership share. Ultimately, such an approach may produce effects 

with regard to the power, the level of mutual support and interdependence, and the 

internal dynamics which will affect the governance and path of the IJV. Likewise, 

ownership in IJVs may be split equally between the partners (i.e., 50%-50%). (Geringer 

& Hebert 1991) 

 

Secondly, in terms of internationality, IJVs often have differing degrees to which their 

parent companies are international, as an IJV may be formed by only two international 

parents or several, spending on the size of the IJV. As documented in Iavor Marangozov’s 

study of 722 IJV firms over a span of fourteen years, a clear pattern developed in terms 

of the number of partners included in the typical IJV. While, as outlined earlier, an IJV 

may include two or more firms, the vast majority (77.2%) operate between two 

participant firms (Marangozov 2005). Moreover, the degree of internationality, in terms 



35 

of the number of partners/parents involved in an international joint venture can thus 

have an impact on the IJV via the impacts associated with culturally and operationally 

disparate international partners/parents in the IJV structure, possibly leading to greater 

complication among a larger number of dissimilar international partners.  

 

Thirdly, one may establish a third characteristic category among IJVs centered around 

whether they are greenfield IJVs or acquisition-based IJVs. Returning to the IJV definition 

provided by Hennart (1988) and Brouthers and Hennart (2007), one can see that firms 

may be made from the ground up and are, through being made from scratch, the unique 

creation of their parent firms, or may be made through the acquisition of an existing 

firm by an overseas partner. In either case, the dynamics surrounding the means by 

which an IJV is formed can affect the future of an IJV. For instance, such characteristics 

may become crucial to IJVs in scenarios where partner/parent influence is more 

important to IJV success or in cases when IJV business goals diverge from or converge 

with those of the parent firms.  

 

 

2.3.  IJV performance 

Undoubtedly, there are many different metrics observed among IJV parent firms 

assessments of what constitutes IJV performance, notably, among the objective forms 

of measuring the performance of an IJV,  sales level, market share, profitability, cost 

control, and labor productivity rank among the strongest elements of the quantifiable 

measures of IJV performance (Geringer & Hebert 1991; Luo 2002). These outwardly 

quantitative elements of judging and assessing performance are typical in the exstinging 

field of literature as well as the field of international business, in which such common 

business metrics are used to be more easily comparable between otherwise 

operationally and geographically disparate international joint ventures.  

 

Moreover, the study by Geringer and Hebert points to performance measures that are 

not strictly measurable or as easily quantifiable as profitability, for example; these 



36 

subjective forms of IJV performance assessment often center around the rankings, 

opinions, and feelings of employees and managers regarding the ability of the IJV to 

perform and reach success (which, as the label “subjective” suggests, is largely up to the 

assessment of individuals) (1991). In particular, Geringer and Hebert’s study points to 

empirical support for a “correlation between objective and subjective measures of IJV 

performance” (Geringer & Hebert 1991: 251). This reality follows a logical path of 

reasoning, as better performance in terms of financials and quantifiable productivity are 

likely to make it more likely that employees will find the situation of their respective IJVs 

to be beneficial and effective in achieving what they perceive to be business success 

(i.e., superior IJV performance) via higher rates of profitability which is likely to place 

less strain on employees and managerial structures, thus producing better overall 

performance-related results.   

 

This allows for the subjective and objective dimensions of performance to be both 

compared and, for the theoretical purposes of further study in the context of this study’s 

observation and investigation of conflict in IJVs, be united under the umbrella term of 

performance. Additionally, this choice in the conceptualization and categorization of IJV 

performance under the aforementioned theoretical framework is also supported by the 

study and associated findings of Dess and Robinson (1984), thus demonstrating that 

objective and subjective elements of performance are vital constituent elements of the 

greater idea of performance and IJVs, thus allowing for the use of these elements to gain 

a deeper understanding about how conflict impacts performance in IJVs.  

 

Thus, to provide a more succinct conclusion pertaining to performance metrics relevant 

to this study, a subjective approach will be taken. This is because employee assessments 

within IJVs will form a significant foundation of the empirical study that is analyzed; this 

decision is also supported by existing literature that collectively supports the utilization 

of subjective metrics in this area of IJV performance research. Such an approach is 

featured in the research conducted by Gong, Shenkar, Luo, and Nyaw (2007), who 



37 

posited that a subjective view of IJV performance is both applicable and appropriate to 

gain insights about IJVs.  

 

Moreover, this theoretical basis is undergirded by similar conclusions based on the 

studies of Geringer and Hebert (1991), Chandler and Hanks (1993), and Yan and Gray 

(1994). Likewise, this approach more accurately allows for the views of employees and 

participants in IJV behavior to give a more honest, meaningful evaluation of the 

operation of an IJV beyond the raw numerical measures associated with business 

functions, which may otherwise overlook important elements related to how a business 

structure is actually performing. For these reasons, with regard to measuring and 

gauging performance within an IJV, a subjective route will be taken in this study.   

 

 

2.4. Different types and views or conflict    

In this section, the different facets of conflict relevant to the theoretical foundation of 

the thesis are explored and explained with the assistance and support of cases and 

theories from the existing body of literature. Beginning with a more general 

conceptualization of the phenomenon of conflict, this section progresses to a discussion 

of the different types of conflict before concluding with an overview of the different 

views of conflict, each of which bears relevance to the subsequent explanation of the 

conflict-performance relationship and the greater conflict-performance relationship in 

IJVs.  

 

 

2.4.1.  Conceptualization of conflict   

In order to gain a solid understanding of conflict through a detailed conceptualization of 

the phenomenon, it is helpful to utilize case studies and analyses of conflict in the 

context of organizational conflict as well as conflict within the context of international 

joint ventures, thus helping to further establish a useful and applicable 



38 

conceptualization of what conflict is in IJVs while also briefly illustrating how it can 

manifest itself in IJV environments. Additionally, understanding the idea of conflict from 

a conceptual perspective can also help to lay the base knowledge necessary for 

understanding the role of the conflict-performance relationship in IJVs by establishing 

how conflict can impact IJV success and performance.  

 

As seen in the common conceptualization of conflict based on the conclusions of Pondy 

(1967), as featured in studies and conceptual reviews by Lee (2001); Fey and Beamish 

(2000); Rahim (2010); Habib (1987); and Barden, Steensma, and Lyles (2005), conflict 

can be effectively conceptualized by breaking down the larger concept into three 

primary stages, namely, “the perceived, felt, and manifest conflict stages”, which are 

the stages relevant to the operation of an IJV (thus excluding Pondy’s “latent” and 

“perceived” elements of the conceptualization due to their tenuous connection to IJV 

conflict in particular) (Pondy 1967; Lee 2001: 151). To briefly summarize the relevant 

components of these three stages, Pondy’s perceived stage can be viewed as when IJV 

participants become cognizant of conflict-borne issues (e.g., when goals between IJV 

firms are disparate). The subsequent stage, the felt stage, relates to when conflict and 

the resulting “stress, tension, or hostility resulting from perceived conflict” is felt within 

the IJV; this stage is followed by the manifest stage in which the aforementioned conflict 

present within the IJV matures and becomes active through “verbal or written 

disagreements” (Lee 2001: 151). 

 

Moreover, to properly and fully conceptualize the idea of conflict, especially in terms of 

the internal dynamics of IJVs, it is important to understand that IJV conflict is often 

viewed through the lens of “parent conflict – tensions arising from differing goals and 

expectations”, as posited by the research and further developed through the theoretical 

discussion of prominent authors in the existing body of literature, including Park and 

Ungson (2001); Yan and Zeng (1999);  Hennart and Larimo (1998); and Steensma et al. 

(2008: 2). In this way, the basic unit of IJV conflict should be the organizations which 

form and guide the ultimate path and progress of the IJV, as nearly all the inter-firm 



39 

issues (including power struggles, ideological differences, etc.) inevitably develop from 

these firms. In this way, the conceptualization of conflict will ultimately be developed 

from Steensma et al.’s (2008) perspective on the existing literature’s position on conflict, 

namely, that it is a phenomenon originating from disparate objectives, aims, and hopes 

for the IJV amongst the parent participant firms of an IJV, thus causing friction within 

the venture’s internal dynamics.  

 

 

2.4.2.  Types of conflict   

To delve into a deeper, more substantive discussion of conflict in IJV relationships, it is 

first necessary to enumerate the different types of conflict that organizations, including 

business unions (like IJVs), often confront during their operations. In terms specifically 

relevant to international joint ventures, it is important to comprehend how the 

aforementioned general types of conflict in business structures can be caused within the 

unique inter-firm relationship present in IJVs. As with the types of conflict, these causes 

can be categorized into their respective types. For instance, one prime type of IJV 

conflict is impacted by the number of firms (i.e., parent companies) involved in the IJV 

structure.  

 

As specifically studied in a quantitative study by Gong, Shenkar, Luo, and Nyaw (2007), 

the number of parent companies has a statistically significant impact on elements of IJV 

operation that cause friction among IJV participant firms, thus fomenting internal 

conflict within the IJV structure. Another relevant type of conflict within the context of 

IJVs revolves around the improper use of power and authority within IJVs by 

participating firms. For example, Lee’s research asserts that “power may cause or 

exacerbate conflict to the point where it becomes dysfunctional”, thus effectively 

eliciting the manifestation of conflict in IJV structures (2001:151). Likewise, Kogut’s 

(1989) position on the competitive nature of inter-firm IJV rivalry among participant 

parent companies further illustrates a type of conflict centered on destructive inter-

partner tendencies (Geringer & Hebert 1991). 



40 

 

Furthermore, Fey and Beamish’s (2000) overview of the theoretical conceptualization of 

conflict sources in IJVs provides the clearest look into what elicits conflict from IJV 

partners. Specifically, Fey and Beamish point to “(1) competition for scarce resources; 

(2) desire for autonomy; (3) goal divergence; and (4) perceptual incongruities”, which 

are in turn attributed to related research from Kochan, Huber, and Cummings (1975); 

Pondy (1967), Perry and Levine (1976); as well as the empirical study conducted 

Rosenberg and Stern (1971). (Fey & Beamish 2000: 142)   

 

However, beyond these potential causes, the actual types of prevalent conflict in IJV 

structures should be expounded upon as well. In particular, one can divide conflict into 

two distinct types, namely, task conflict and relationship conflict. With regard to task 

conflict, firms involved in this type of conflict often involve inter-party issues related to 

elements in firm operations, including how resources are allocated, policies, standards, 

firm procedures, and interpretation of definitive facts with regard to the function of a 

firm or IJV (De Dreu & Weingart 2003). In contrast, relationship conflict primarily relates 

to the softer, interpersonal side of conflict. Notably, relationship conflict traditionally 

occurs between people or groups in a business structure and thus may involve cultural 

issues, in-group versus out-group enmity, or incompatibility of personalities or working 

styles, among others (ibid. 2003). Consequently, since task conflict is more germane to 

the concerns related to IJV conflict and the ideas of performance and its relation to 

conflict within the conflict of the empirical study of this thesis, task conflict is selected 

to be the main focus of the thesis’ discussion.  

 

 

2.4.3.  Different views of conflict 

In the more direct and simple terms, conflict can be roughly divided along the general 

lines of a dichotomy which distinguishes instances and implications of conflict in terms 

of positive or negative impacts within a business structure. For instance, when dividing 

conflict between perceptions and views in the literature which paint it is potentially 



41 

positive or generally negative, it is often the case that there is a perceived difference in 

whether conflict is viewed as a natural and expected element of working in a complex 

business structure (like and IJV) or as a barrier to success that pits organizational 

objectives and styles against each other to reach an operational or ideological stalemate 

rather than beneficial outcomes.  

 

 One clear example of this perceived dichotomy in the literature is exemplified by 

Hollyoake, Ashleigh, and Higgs’ example of B2B relationships and how while “healthy 

conflict also leads to the development of war stories”, unresolved, festering conflict can 

lead to the deterioration of relationships and the potential divide of partners in business 

due to a widening gap between them (2016: 30). In this way, what is often described as 

“functional” (as opposed to dysfunctional) conflict can, contrary to the common 

perception of the concept, introduce opportunities for partners to work around 

problems, identify effective resolution strategies, and avoid unnecessary strife in the 

future, thus acting as a beneficial force on a business relationship (Hollyoake, Ashleigh 

& Higgs 2016: 29).  

 

International joint venture structures and their inherent instability due to their 

internationality and the frequency of cultural distance between partners creates 

instances of both instability and conflict. If one interprets the internal conflict of IJVs as 

a manifestation of instability created by the complex internal structure of IJVs through 

the lens of business instability developed and explained by Yan and Zeng, the idea of 

conflict should also be perceived as a neutral state and basic condition of an inter-firm 

relationship, like an IJV; in truth, the unusual IJV is not one that is beset by conflict or 

instability but rather the one that lacks it (Yan & Zeng 1999). This adds further 

complexity to the underlying positive-negative dichotomy of conflict, as this theoretical 

interpretation suggests that conflict arising from IJV instability is more natural than 

irregular, implying that most IJVs, if not all, endure some form of internal conflict that 

ultimately produces an IJV structure that either breaks apart or survives in spite of, or 

perhaps because of, its previous bouts of conflict.  



42 

 

Moreover, in addition to the common identification of conflict as a cause for stagnation 

due to competing viewpoints and paths, conflict is also viewed by some as a catalyst 

that can drive change. Similar to the perspective of Hollyoake, Ashleigh, and Higgs (2016) 

and Steensma et al., which stated that the occurrence of “conflict between parent firms 

acts as a catalyst that interacts with power imbalance and knowledge acquisition”, thus 

granting conflict the ability to overcome common issues found within IJV structures 

(2008: 3).  

 

Crucially, if one returns to the previously enumerated types of conflict, namely, task and 

relationship conflict, existing knowledge about these two types of conflict can also point 

to the general consensus among many contributors to literature that task conflict is the 

generally beneficial catalyst (i.e., functional) form of conflict. As elucidated by De Dreu 

and Weingart, this position was thoroughly analyzed, yielding supportive results based 

on the perspectives espoused in the works authored by Amason and Schweiger (1997) 

along with Van de Vliert and De Dreu (1994) and, more recently, Simons and Peterson 

(2004). In contrast, relationship conflict can dramatically raise levels of intra-IJV stress, 

causing it to be more detrimental and, in effect, a clear exemplar of dysfunctional 

conflict (Jehn 1997). (De Dreu & Weingart 2003) 

 

Likewise, conflict can also be viewed as having the ability to impact IJV structures in 

dramatic ways, including the “conversion [of an IJV structure] to a wholly owned 

subsidiary” wherein a “partner takes full ownership” (Steensma et al. 2008: 3). Similarly, 

firms and instances of inter-organizational corporations in IJVs are often defined by 

growth and constant change, thus giving rise to the conditions that are prime for 

conflict. Collectively, this ability of conflict to influence the dynamics and even path of 

an IJV is further exacerbated by the international and usually intercultural nature of 

many IJV structures (Luo 2006). Thus, depending on where a particular perspective of 

conflict falls on the spectrum of the aforementioned dichotomy, conflict can be viewed 



43 

as either a harbinger of beneficial change or as a form of ultimate stagnation that bars 

firms’ access to inter-firm IJV success.   

 

 

2.5. Conflict resolution strategies and theoretical roots 

In this section, a brief and concise presentation of the theoretical roots and meanings of 

the four conflict resolution strategies relevant to this study will be offered. Moreover, 

in terms of the theoretical context and underpinnings of the following four conflict 

resolution strategies, the positions and insight contributed by Lin and Germain (1998), 

Lu (2006), and Nguyen and Larimo (2011) will be utilized. In this way, a strong, yet 

straightforward, understanding of the conflict resolution strategies will be established, 

which will allow for a more comprehensive and meaningful discussion of the moderating 

effects of their strategies on the conflict-performance relationship of IJVs. 

 

 

2.5.1.  Problem-solving 

To begin with the problem-solving conflict resolution strategy, this strategy, which is 

often an integral tool in the arsenal of conflict resolution strategies available to 

international firms is based on the concept of allowing both parties in a conflict to openly 

and candidly engage in a discussion which allows for the parties to talk out their issues. 

In this way, the two firms in an IJV situation using the problem-solving strategy aim, 

through their mutual participation, to find an effective solution that satisfies the needs 

and prerequisites of both firms in the IJV (Lin & Germain 1998; Pruitt 1981).  

 

Although this approach may seem self-evident or even nebulous at first glance, its ability 

to produce meaningful results, along with the following strategy of compromising, 

should not be underestimated in contemporary international business contexts. 

Moreover, in terms of an example, an IJV firm pursuing a problem-solving strategy may 

establish a setting in which all partner firms in the IJV can provide their perspectives and 



44 

present their alternatives, thus allowing them to reach an effective solution by 

considering the problems and needs of each party. Naturally, as this approach requires 

the parties to be at least somewhat accepting of each other’s approaches and willing to 

hear out the perspectives of others, it is especially relevant for those IJVs in which 

partners are more receptive to other partners’ approaches (Johnson, Cullen, Sakano & 

Takenouchi 1996). 

 

 

2.5.2.  Compromising       

Secondly, the compromising conflict resolution strategy, which shares certain 

similarities with its problem-solving predecessor, is theoretically encompassed when 

firms in IJV structures seek to find a middle path between the desires and goals of 

conflicting firms, effectively creating a compromise (Lin & Germain 1998; Friedmann and 

Beguin 1971). By seeking to find a common means of traversing potential impasses 

between IJV partners, the compromising strategy hopes to avoid the zero-sum pitfalls 

associated with the following two conflict resolution strategies. In this respect, the 

compromising approach hopes to also bypass the typical stalemates and standoffs 

associated with coercion and domination among firms/partners. In the case of IJV 

operations, an example of a compromising strategy may involve when a partner in 

conflict with another IJV partner focuses on mediating and facilitating the relationship 

to find a middle ground that is mutually acceptable, thus allowing for progress to be 

made.  

 

Such an approach can be an especially relevant and helpful approach in situations where 

IJV partners are not extremely culturally disparate. This is because compromising may 

help the firms take advantage of similar views and perspectives and thus reach a more 

effective, speedy compromise (Campbell, Graham, Jolibert & Meissner 1988). 

Importantly, both the problem-solving and compromising strategies are theoretically 

rooted in the theory of social exchange posited and developed by Steensma et al. (2008) 

and Blau (1964).  



45 

2.5.3.  Forcing     

Thirdly, the forcing conflict resolution strategy notably diverges from the first two 

approaches and is the first of the second category of conflict resolution strategies, which 

differ in spirit from the first two strategies presented in 2.5.1 and 2.5.2. Based on its 

theoretical underpinnings, the forcing strategy is more aligned with the act of unilateral 

brute-force coercion, as seen when one firm tries to dominate or dictate circumstances 

to its counterpart (Lin & Germain 1998; Lu 2006; Nguyen & Larimo 2001). In this sense, 

an example of forcing behavior as a conflict resolution strategy can be when one larger, 

more powerful partner firm in an IJV attempts to dominate or force another firm in the 

IJV to act as the more powerful partner wishes, essentially pressuring the other firm 

(Thomas 1976).  

 

Naturally, due to the circumstances surrounding the firms involved in the IJV 

relationship, the leverage or authority that a firm uses to force or coerce another may 

range across a wide variety of variables, including ownership, size, and influence, among 

others. Additionally, as with the following conflict resolution strategy (i.e., the legalistic 

strategy), the success and applicability of this strategy rely on the context in which it is 

applied and the type of conflict that it aims to address. For example, such a coercive 

approach and the application of control may be more apposite in a situation between 

firms that hold extremely disparate cultural or operational perspectives, which may 

keep partners from openly communicating and thus may preclude any of the other more 

cooperative methods to be used effectively (Geringer & Hebert 1989).  

 

 

2.5.4.  Legalistic 

Fourthly, the legalistic conflict resolution strategy can be described as a more 

jurisprudential type of strategy insofar as it emphasizes the idea of fairness. This is 

typically achieved by relying on previously established documents and contracts, thus 

resting much of its strength and authority as a conflict resolution strategy on the power 

held by legally binding agreements and obligations (Lin & Germain 1998). In terms of an 



46 

example of a legalistic strategic approach to resolving conflict, a company may point to 

an IJV founding document (like a contract between parent firms in the IJV) to highlight 

how certain responsibilities should be undertaken and/or structured between the 

relevant parties. However, as noted and clarified by other authors, in practical terms, 

this approach, while outwardly direct and straightforward in theory, can often mean 

that one party is, in effect, coercing another party through the use of previously 

established documents (Lin & Germain 1998; Pfeffer 1994).  

 

Furthermore, both the legalistic strategy and its counterpart, forcing, are based heavily 

on game theory and the underlying concept of a zero-sum situation dominating in 

conflict scenarios. Specifically, game theory, as it relates to the forcing and legalistic 

strategies, primarily underscores that in conflict situations in IJVs, there is a clear winner 

and loser since in order for one side to gain what they desire (i.e., from the other party 

in the scenario), the other side must make concessions (Rapoport 1974). Moreover, this 

underlying belief about the nature of conflict in IJVs is also further explained by the 

transaction cost theory. In this respect, transaction cost theory, as a more specific subset 

within agent theory, also helps one to understand these two comparatively agonistic 

approaches to conflict resolution, as it states that that the optimal approach (in this case 

for IJVs) is an approach which minimizes the transaction costs associated with 

conducting business within an organizational context (Williamson 1979; North 1992). 

Therefore, the forcing and legalistic approaches are both especially germane to this view 

of conflict resolution, as both the win-lose nature of game theory and optimization focus 

of transaction cost theory both point to the strengths of a theory which seek to assert 

one’s own perspectives during an IJV conflict while minimizing resources spent to seek 

a more complex, drawn-out compromise.  

 

 

2.6.  Conflict and performance relationships in IJVs  

To further develop the theoretical undergirding elements of the study’s framework 

which will be used for this thesis’ core study, it is necessary to gain a fuller understanding 



47 

of the relationship between conflict and performance within IJVs; moreover, through 

comprehending this central relationship and the impact of conflict as a variable on the 

performance of IJVs, one can further investigate and comprehend the relevant 

moderating factors (i.e., the aforementioned conflict resolution strategies). 

Furthermore, understanding the existing contributions added by other researchers and 

sources within the existing body of IJV research literature can help form a solid 

foundation upon which conjectures about the true nature of conflict and performance 

in IJVs can be ascertained.  

 

However, when investigating this relationship, it is important to reference the fact that, 

as elucidated earlier in the thesis, there exists no clear or definitive view of the conflict-

performance relationship in IJVs. More specifically, radically different views exist as to 

the impact that conflict can have on how IJVs perform. In particular, different sources 

assert that conflict has either a positive or negative impact on the performance of IJVs.  

 

In this way, it is crucial to briefly present existing literature on both sides of this 

theoretical and conceptual divide to clarify previously mixed opinions among authors. 

This suggested relationship is, in certain respects, notably older than the opposite view 

of conflict and performance and was posited on a theoretical basis by a wide variety of 

authors in the field of IJV literature, including Harrigan (1985), Killing (1983), along with 

Reynolds (1984). This original theoretical basis has been fleshed out and developed 

further by subsequent authors studying more contemporary contexts, including 

Boonsathorn (2007) and Robbins (2005). Among authors that have sought to illustrate 

the negative impact of conflict on IJV performance empirically, studies by Hebert (1994), 

Tillman (1990), and Hyder (1988) clearly demonstrated the significant degree to which 

conflict has an inverse effect on performance. (Julian 2005; Nguyen 2011) 

 

Moreover, more comprehensive, holistic observations and quantitative studies, like the 

one undertaken by Habib (1987), also point to a decrease in performance associated 

with greater levels of conflict in an IJV structure. Similarly, Liu, Fu, and Liu (2009) 



48 

explored an inverse relationship between conflict and the overall outcomes of IJVs, 

including performance, regarding both task and relationship conflict.  Moreover, these 

aforementioned studies suggesting the negative relationship between conflict and IJV 

performance were conducted in a wide array of international contexts with a thorough 

selection of culture and background among the studied IJV partners. In this way, there 

is a clear insinuation among the large group of authors in this camp that conflict, by and 

large, carries with it negative impacts related to IJV performance. (Fey & Beamish 2000) 

 

In contrast, an important counterpart to the aforementioned literature supporting the 

view that conflict has a negative impact on IJV performance takes the opposite position. 

Specifically, a number of studies suggest that contrary to being detrimental to 

performance, certain types of conflict may ultimately improve IJV performance. 

However, as supported by studies and theoretical frameworks provided by authors 

including De Dreu and Weingart (2003), this beneficial view of conflict often applies to 

tasks, as opposed to relationship conflict, as relationship conflict seldom has the ability 

to empower, unite, and clarify internal dynamics. Instead, it often creates greater 

tension and friction between IJV partners.  

 

Although the number of studies that support this positive view of conflict is ostensibly 

smaller when compared to the outwardly large, established body of work concerning 

the inverse relationship between conflict and IJV performance, certain studies have 

espoused this contrarian view. For example, a wide variety of authors, including Tjosvold 

(1997), Levine, Resnick, and Higgins (1993), Saavedra, Earley, and Van Dyne (1993), and 

Nemeth (1986), have concluded that conflict can be good for organizations, like IJVs. 

Though these contributors to the existing field of knowledge each have their own 

perspective about the potentially positive elements of conflict, the uniting idea among 

them is that conflict can act as a sort of catalyst that challenges roles and can ultimately 

create a stronger organization. In a similar vein, this initial period of difficulty and tumult 

can help firms to recognize what is wrong in an IJV, as conflict can uncover otherwise 

unnoticed and unexplored issues between partners in an IJV. Naturally, the degree to 



49 

which this conflict is destructive in IJVs relies greatly on the degree to which the conflict 

is within control and is led through an organizational conduit that is conducive to success 

(e.g., effective IJV management). (De Dreu & Weingart 2003) 

 

Moreover, the idea of task conflict and opposing views/work styles acting as a catalyst 

from firms and IJVs in a wide variety of situations is common in the field of IJV and IB 

research and has theoretical and empirical roots over several decades (Gladstein 1984; 

Schwenk 1990; Bolton 1986; De Dreu & Weingart 2003; Chan, Luk & Wang 2005). Thus, 

the existing disparity in existing positions leads to a clear need to study the relationship 

between conflict and IJV performance to gain a better understanding of the true nature 

of the relationship while also considering the novel moderating effects of the 

moderating factors. For this reason, a discussion of the conflict-performance 

relationship in IJVs is followed by a discussion of the elements and strategies that affect 

it, namely, the moderating factors of the conflict resolution strategies that are key to 

the topic of this thesis’ study.  

 

 

2.7.  Moderating impact of conflict resolution strategies on the conflict-

performance relationship 

After providing a discussion of the theoretical roots of the conflict resolution strategies 

and the underpinnings of the conflict-performance relationship in IJVs, it is crucial to 

exposit the moderating impact of conflict resolution strategies on the conflict-

performance relationship in IJVs (Lin & Germain 1998). Specifically, by comprehending 

how each of the four strategies impacts the conflict-performance relationship, one can 

gain a better understanding of the framework of the study and the foundation upon 

which this study’s novelty and insights are predicated. Additionally, it is important to 

underscore that since this approach to IJV research is relatively novel in the field of 

existing literature, most of the following discussions regarding the moderating impact 

will be rooted in the theoretical underpinnings discussed in subsections of 2.5 in this 

literature review.  



50 

2.7.1.  Moderating impact of the problem-solving strategy 

Beginning with a consideration of the problem-solving strategy and its associated 

moderating impact on the conflict-performance relationship in IJVs, taking a more 

amiable, open approach to discussing issues in IJVs is, by its design, likely to yield more 

beneficial results by mitigating conflict. Specifically, as elucidated by Lin and Germain 

(1998) as well as by Lu (2006), the more tolerant and cooperative facets of the problem-

strategy help, in certain respects, to facilitate a greater degree of actual profit mediation 

in comparison to more standoffish approaches.  

 

Likewise, in terms of a more specific moderating effect, one can see that the underlying 

situations that promote and enable the use of the problem-solving strategy are, in and 

of themselves, more prone to assuage conflict and thus improve the performance of 

involved IJV partners (Lin & Germain 1998; Johnson et al. 1996). In this way, the 

outwardly evident elements of the problem-solving approach as a conflict resolution 

strategy are, in terms of their moderating effects, more likely to yield a positive impact 

on conflict mitigation (and an improvement in IJV performance). Likewise, this impact 

likely stems from the act of two or more partners convening to sort out their respective 

problems instead of facing each other via more confrontational means.  

 

Additionally, when integrating the previously discussed social exchange theory, which 

undergirds both the problem-solving and compromising strategies, the non-zero-sum 

and more mutually beneficial approach upon which the social exchange theory is based 

(Blau 1964). Therefore, one may view the problem-solving strategy as a manifestation 

of the social exchange theory in the way that firms approach conflict. In this way, the 

cost-benefit considerations underneath the problem-solving strategy point to the 

strategy’s moderating effect on conflict. Namely, that the strategy has the ability to 

negatively moderate (i.e., reduce) conflict levels when applied in IJVs.      

 

 

 



51 

2.7.2.  Moderating impact of the compromising strategy 

As with the previous strategy, the moderating impact of the compromising strategy is 

also largely shaped by the nature of the strategy itself. The important aspects of the 

strategy, as elucidated by the underlying theory, rests in the strategy’s goal of 

communicating to find a common middle ground that works for both parties and lies 

between the hopes of either party (Lin & Germain 1998). In this way, although neither 

partner in the IJV conflict is likely to attain all of their goals, the result of using this 

strategy is a situation that is acceptable for both parties. For this reason, the moderating 

impact of this strategy on the conflict-performance relationship is similar to the 

problem-solving strategy. Specifically, by compromising and finding the best bridge 

across the veritable chasm that may exist between conflicting partners, conflict is likely 

to be largely assuaged by a mutually acceptable solution (Lu 2006).  

 

Similarly, this strategy can moderate the relationship by bettering performance by 

preserving long-term relationships and relieving stalemates (Dwyer, Schurr and Oh 

1987; Friedmann and Beguin 1971). Consequently, the limiting of conflict through 

compromise will likely enhance IJV performance. Moreover, considering the 

aforementioned social exchange theor