Explanatory Paradigms

If we examine conflict through the lens of Fey and Beamish’s (1999) definition of global joint venture conflict, “where the actions of one partner prevent or compel some outcome against the resistance of another partner” (p.

Relational Orientation. Research confirms that there are downward spirals of joint ven­tures when relational conflict occurs within the organizational partnership (Buckley & Casson, 1998; Hambrick, Li, Xin, & Tsui, 2001). Incompatible management styles and approaches, differences in organizational cul­ture of the partners, differences about roles in power sharing, task interdependence, or perceived inequality in distribution of costs and benefits (Chua & Kin-Man, 1993; J. D. Lewis, 1990; Wright, 1979) all contrib­ute to a cycle of relational conflict that moves up and down the levels of interaction, each level mirroring the other.

Relationship building, therefore, is a pri­mary mechanism for addressing interorgani- zational conflict. Extended relationships and partner cooperation have been found to dif­fuse conflict and induce further cooperation over time (Ring & van de Ven, 1994) and mutual exchange between alliance partners improved performance (Luo & Park, 2004). Joint ventures’ performance and trust were also improved by a “relationship orientation” between manufacturers and foreign distribu­tors (Zhang, Cavusgil, & Roath, 2003).

Affective interpersonal relationships orient competitors to manage their interpersonal conflicts cooperatively. For example, Wong and Tjosvold (2010) found that positive rela­tionships between key stakeholders in compet­ing Chinese firms led to mutually beneficial interaction and a sense that major goals were in synchrony. Managers with positive personal connections were found to avoid discussing their various conflicts in a competitive, win- lose manner. Low level “competitive” conflict predicted effective partnerships. On the other hand, distant low quality relationships meant the companies were more competitive in their approach to managing conflict and thereby collaborated ineffectively, and conflicts were more difficult to resolve, if at all.

Trust. The development of trust between global partners (Arino & Torre, 1996) is often cited as primary relational mechanism improving IJV performance (e.g., Gabarro, 1978; Ring & van de Ven, 1994).

Cooperation. A central concept in the study of conflict in transnational alliances is that of partner cooperation. In cooperative arrange­ments, partners attempt to strive for a collec­tive outcome that exceeds the sum of each of the participants’ opportunity costs. Finding an appropriate balance between individual motives and cooperation is paramount to serv­ing the collective interest. As Luo and Park (2004) note,

The joint venture is an intermediate form of governance designed to mitigate the hazards in market and hierarchy, but it is subject to other hazards attributable to both ends of that governance—that is, partner conflicts and managerial complexities. (p. 143)

Indeed, incentives to cheat and pursue one’s own group or individual (vs. the partnership’s) goals is always a possibility as alliance part­ners walk the delicate tightrope between indi­vidual contributions and collective benefit in a competitive market (Spekman, Kamauff, & Myhr, 1998). Cooperation in the face of self­interest and competitive uncertainty remains difficult, and possible conflict lurks around every corner (Park & Ungson, 2001); but without cooperation, mutual forbearance and structural adjustments become less appealing to the partners (Luo & Park, 2004).