Business Case Study The business case study undertaken by Heiman et al is a significant step forward in the direction of assessing the elements that determine the performance of a joint venture business. This study has been carried out specifically in the context of JVs formed between China and the US. The factors that have been identified as the determinants of performance of a JV are: strategic fit, cultural fit and organizational fit between the partnering companies. Strategic fit refers to the coherence between the companies in terms of their shared goals and objectives.
Cultural fit refers to the ease of managerial communication between the companies keeping in mind the cross-cultural hurdles and cultural differences between the firms. Organizational fit refers to the consensus between the partnering firms with respect to their internal business decisions such as hiring, managing, training, compensation etc. The four parameters that have been deduced as the indicators of a JV’s performance are: perceived satisfaction with the performance of the JV, perceived prior financial performance trends, perceived overall competitiveness and perceived efficacy of the decision making process. The study has, on the whole, been successful in achieving the targets it had set at the beginning.
But there are certain areas, both in the structural design and the methodology of this study, which are marked by a scope for further improvement. Firstly, the marginalized selection of JVs for the study has greatly narrowed down the scope of applicability of the findings. The study is based solely upon the JVs between US and China, and that too only those which are located in China. Furthermore, the JVs have been selected from primarily four regions in China.
As a result of this narrow selection of the sample elements, the study cannot be treated as a generalized analysis. It can be applied to only those few regions where the sample JV firms are located. Secondly, only those JVs that have been in operation in the last two years have been sampled which further marginalizes the scope of the study. It limits the validity of the findings as two years is too short a period of time to assess the performance trends of any firm.
Moreover the sample size for this study is 80, which is a significantly small figure for such a wide-ranged study. Though this population size somewhat serves the purpose of this study, more refined, accurate and authentic results can be obtained by expanding the sample population to 150-200. Thirdly, few more factors could have been considered for their influence on the performance of a JV firm. Some of the macro-environmental factors are: legal framework of the host country, environmental concerns and political ethos of the partnering firms.
To some extent, the micro-environmental factors like nature of the industry, organizational structure of the individual firms and length of association too play a major role in deciding the performance of a JV. The above mentioned points, if included, would make the study more comprehensive, broad-ranging and accurate. It will not only enrich the study by widening its scope, but also add multiple new perspectives to the already existing analysis and conclusions.