Business failures in institutionally weak environments: An examination of Virgin Atlantic’s failed adventure in sub-saharan africa

Abstract

In view of the paucity of scholarly work on how conditions in weak institutional environments at organizational founding can persist leading to eventual international joint ventures (IJVs), this paper utilizes the case of Virgin Nigeria Airways to illuminate our understanding of the subject. Based on semi-structured interviews, we developed a four-phase model that demonstrates the persistent interactions of internal and external factors. The four phases are as follows: pre-formation resource mobilization, formation and embryonic challenges, decoupling and rebranding, and phasing out. Phase 1 highlights political and non-political activities geared towards venture formation and resource mobilization. Phase 2 focuses on the decoupling of functional activities and the loss of legitimacy in response to changing political and economic conditions in the country. Phase 3 sheds light on triggers for corporate rebranding activities resulting from loss of identity and legitimacy. In Phase 4, we highlight the dispute with the government that typified and culminated in the airline's demise. We identify and examine the implications of these findings.