The Effects of Control and Trust on Joint Venture Performance: A Case Study of the Joint Venture Success Factors

Abstract

The purpose of this study is to find further understanding on joint venture performance by studying the concepts of control and trust and how they relate to the joint venture`s performance and success. The research is based on an actual need to document the history and developments of a joint venture and to find out the factors that have contributed the joint venture`s success. Control and trust are concepts that have been frequently studied in the joint venture context and they are seen as important factors for understanding joint venture operations. However, the area still offers interesting opportunities for further research as the concepts and the relationships are characterized with great complexity.

A conceptual model was constructed for this study consisting of earlier research findings and theories on the subject. The study was conducted by applying the case study method. The joint venture system consists of two parent companies and the joint venture all operating in the financial services industry in the Nordic countries. Data for the study was collected through a series of semi-structured interviews. The interviewees are senior managers from both parent companies as well as managers from the joint venture. In addition to interviews, data was also gathered from internal company documentation and reports.

The findings of this study suggest that both control and trust are integral for effective joint venture operations, and they both serve as predictors of joint venture performance. However, when assessing the success of the joint venture the relationship is not as straightforward. The findings indicate that trust can be named as the primary factor to success while control works in the background allowing for the conditions of success to emerge in the joint venture relationship. Trust allows for many benefits that are found important for the joint venture that are open communication, deeper commitment, and more effective conflict resolution mechanisms that together lead to more efficient cooperation.