Joint venture dissolution as corporate divorce

Abstract

Executive Overview Although “corporate divorces” among joint venture (JV) partners are frequent, JV managers are often caught off guard by the prospect of termination and are ill prepared to cope with the tensions and uncertainties associated with the breakdown of the relationship. We argue that, economic and strategic rationales aside, the dissolution process itself is an important determinant of the outcome when a JV relationship is terminated. Drawing on the human divorce literature, we use divorce as a metaphorical image through which a four-phase dissolution process is developed. Managers are advised to watch for warning signals revealing a fraying relationship. They need to pay particular attention to the asymmetry between the divorce initiator and partner, the repercussions of going public, and the impact of the aftermath on future strategic relationships.