Termination of related and unrelated joint ventures: A contingency approach

Previous research has investigated various factors that influence joint venture (JV) termination. Yet the majority of studies do not distinguish between different types of JVs, particularly whether a JV is related or unrelated to the parent firm. Due to their inherent differences, related and unrelated JVs are likely to evolve distinctly, and their tendency to terminate may also differ under various conditions. This study takes a contingency approach and argues the impact of various factors on JV termination depends upon JV relatedness. An event history analysis finds increases in environmental uncertainty and higher resource complementarity reduce the likelihood that a firm will terminate unrelated JVs as compared to related JVs. Conversely parent firm performance and wider JV scope increase the likelihood that the firm will terminate unrelated JVs as compared to related JVs. The findings suggest the need to consider JV relatedness in understanding JV evolution and termination.

► The impact of various factors on joint venture (JV) termination depends upon JV relatedness to the parent firm.
► Increases in environmental uncertainty reduce the likelihood of termination of unrelated JVs as compared to related JVs.
► Higher partner resource complementarity reduces the likelihood of termination of unrelated JVs as compared to related JVs.
► Parent firm performance increases the likelihood of termination of unrelated JVs as compared to related JVs.
► Wider JV scope increases the likelihood of termination of unrelated JVs as compared to related JVs.