Chapter 5 Discussion and conclusion
5.3 Conclusion
In this study the effect of two contract based conflict resolution mechanisms (e.g. arbitration provisions and veto rights) and one board based conflict resolution mechanism (e.g. outside directors) on JV performance has been researched. Furthermore, the moderating effect of environmental uncertainty on these relationships was researched as well. This study contributes to theory as well as practice by filling the existing research gap of conflict resolution mechanisms in alliance governance research. Since JVs experience high levels of behavioral uncertainty and opportunistic behavior, 40 to 60% of JVs fail (Park & Ungson, 2001). To reduce the chance of failure, effective alliance governance is of major importance and the design of conflict resolution mechanisms could play a pivotal role in this (Mohr &
Spekman, 1994). More specifically, the complementary or substitutionary effects of contract based and board based conflict resolution mechanisms has been neglected in existing
literature on formal governance. Moreover, in the presence of uncertainty the objectives of partners are more frequently misaligned (Klein et al., 1990), which will likely result in more conflicts. Therefore environmental uncertainty can affect the performance consequences of certain conflict resolution mechanisms. Nevertheless, this effect has not yet been researched
37 yet. Following existing literature, a positive effect of the researched conflict resolution
mechanisms on JV performance and a positive moderating effect of environmental
uncertainty on these relationships was expected. However, a positive effect of veto rights on JV performance could not be ascertained, while arbitration provisions and outside directors even demonstrated a negative effect on JV performance. Lastly, a positive moderating effect of environmental uncertainty on the relationship between the conflict resolution mechanisms and JV performance was found for outside directors only.
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