Unlocking International Joint Ventures

CHAPTER SIXOPTIONS:SMALL TOWN VERSUS BIG TOWN MARRIAGES (OR, IT MAKES SENSE TO LIMIT PARTNER OPTIONS)

‘Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.’

– Barry Schwartz

Our research and experience, when it comes to the partner selection, brought out a conundrum.

The academic research along with our own experience makes clear that the most important step of the IJV formation journey is finding the right partner.

Most academic literature, unfortunately, tends to start with the assumption that you already have your partner because observing corporate dating is almost as hard as observing the formation process.

However, our professional experience has allowed us to observe first-hand how international partners seek the right partner. Perhaps counterintuitively, it appears that international partners with too many possible partners to choose from tended to struggle with consummating their IJV project.

We believe there may be a number of factors at play here.

Firstly, it is more difficult to close a deal when you are spoiled for choice. Having too many choices makes it too easy to assume there is a better option out there – so when you hit a roadblock in negotiations the tendency is not to work through the difficult issue and/or make concessions but rather to try a different partner.

The second challenge with having too many possible partners is that this may mean ...