Failure as a Consequence of Partner Politics: Learning from the Life and Death of an International Cooperative Venture

While it is widely recognized that international cooperative ventures suffer a high rate of failure, current theories, namely transaction costs, partner selection, bargaining and learning, offer limited and disjointed reasoning for it. Each of these theories is focused on a single aspect and on a limited phase in the venture’s life, neglecting the process that leads to eventual termination. To study this process, an in-depth analysis of the demise of an international cooperative venture in China traces the critical events in the venture’s life cycle. The analysis shows that escalation of partner political behavior played a key role in the venture’s failure. An integrative political process model incorporating the dynamic aspects of the relationships between parents within their environmental context is developed.