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Management article
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Reference no. SMR44412
Authors: Bettina Buechel
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2003
Length: 7 pages

Abstract

Between 1991 and 2001, the average number of joint-venture deals announced each year increased from 1,000 to 7,000. Executives are clearly setting great store by these temporary partnerships as a way of achieving both short-term and longer-term goals. As with any type of alliance, however, success can be elusive, and a poor relationship between the partners is often at the root of difficulties within a venture. A negative cycle frequently develops in which poor partner relations lead to poor performance, which in turn puts the partner relations under greater pressure. In the course of her work with executives from joint ventures and their parent companies, the author identified five minefields that can explode and damage the relationships in an otherwise fruitful operation. Since joint ventures are here to stay - they are still sometimes the only way for a company to enter a new market or to gain access to key technology or people - managers must learn to avoid the minefields if they are to realize the full potential of these strategic partnerships.

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Abstract

Between 1991 and 2001, the average number of joint-venture deals announced each year increased from 1,000 to 7,000. Executives are clearly setting great store by these temporary partnerships as a way of achieving both short-term and longer-term goals. As with any type of alliance, however, success can be elusive, and a poor relationship between the partners is often at the root of difficulties within a venture. A negative cycle frequently develops in which poor partner relations lead to poor performance, which in turn puts the partner relations under greater pressure. In the course of her work with executives from joint ventures and their parent companies, the author identified five minefields that can explode and damage the relationships in an otherwise fruitful operation. Since joint ventures are here to stay - they are still sometimes the only way for a company to enter a new market or to gain access to key technology or people - managers must learn to avoid the minefields if they are to realize the full potential of these strategic partnerships.

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