Modeling the performance of international construction joint ventures

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2007
Özorhon, Beliz
International joint ventures (IJVs) have become popular because of their importance as a strategic alternative in global competition. Construction companies consider IJVs as a vehicle to enter new markets and exploit business opportunities. Being a special type of strategic alliance, IJVs offer partnering companies to combine the distinctive competencies and the complementary resources. Despite the benefits associated with IJVs, such entities are very difficult to manage mainly due to their inherent complexity, involving a mixture of different cultures, managerial systems, philosophies, and attitudes. As a result of these difficulties, the failure rate of IJVs is generally high. Therefore, measurement of the performance of IJVs has been an important research topic for a few decades. However there is no consensus on an appropriate definition of the indicators and determinants of IJV performance in construction. In this study, a framework is proposed to model the IJV performance in construction industry. A multi-dimensional performance measure is developed and determinants influencing the level of performance are defined. In this context, a questionnaire survey was administered to Turkish construction companies that have established IJVs with foreign partners. The validity of the proposed drivers and measures of performance is investigated and relationships between them are analyzed using the structural equation modeling technique. The results point out the significance of the inter-partner fit and the quality of partner relations for a successful IJV operation. The findings of the study also suggest that project-related factors have a moderate influence on IJV performance. In a properly designed IJV structure, partners with compatible skills, resources, and cultures are found to maintain good relations and are expected to achieve greater IJV success.

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Citation Formats
B. Özorhon, “Modeling the performance of international construction joint ventures,” Ph.D. - Doctoral Program, Middle East Technical University, 2007.