Power imbalance and value creation in joint ventures
Department
Michael A. Leven School of Management, Entrepreneurship and Hospitality
Document Type
Article
Publication Date
4-1-2021
Abstract
Joint ventures (JVs) often do not create expected value due to power imbalance between partners. Despite the fact that JV partners are embedded in relational constraints, prior research has largely relied on economic reasoning by focusing on equity ownership difference between JV partners as the main source of power imbalance. We extend prior research to also consider important relational factors represented by repeated ties between partners and network openness, as well as institutional status difference and network status difference as two additional dimensions of power imbalance. Our findings indicate that ownership power imbalance by itself does not have a significant effect on value creation. However, value creation is facilitated when there is ownership power imbalance between partners with more repeated ties. In contrast, value creation may be hindered when JV partners with unequal ownership are embedded in more open interfirm alliance networks. Furthermore, value creation is facilitated if JV partners that have unequal ownership also have network status power imbalance in the same direction.
Journal Title
Long Range Planning
Journal ISSN
00246301
Volume
54
Issue
2
Digital Object Identifier (DOI)
10.1016/j.lrp.2020.102014