Conflict, trust, and power in international joint ventures: a governance perspective

Conflict is an inherent yet controversial aspect in international joint ventures, having two facets: being disadvantageous for collaborations as well as a fuel for learning and adaptation, making it a research interest to assess its performance and stability for researchers and business organizations. This research extends its understanding of conflict as a consequence of the discrepancy between organizational work and the goal set by the owner of the organization. Then, it explores whether conflict affects directly or indirectly, depending on the thing managed or governed. Herein, we test the direct and mediated relationships among conflict, conflict potential, trust, power dynamics, performance, and stability, using survey data from 199 professionals involved in international joint ventures in China and applying Partial Least Squares Structural Equation Modeling. The results suggest that conflict does not completely increase performance but substantially increases trust and power recalibration. Trust as well as power positively induce performance and stability, with power showing a principally strong effect on stability. Conflict potential strongly forecasts trust and exerts indirect effects on consequences through interactive pathways. Hence, conflict can be considered as a governance trigger rather than a direct performance driver. By incorporating the foundation on two well-established theories, i.e., Institutional Theory and Agency Theory, this study proceeds international business research by determining that the impact of conflict in international joint ventures is provisional upon effective relational and structural governance responses. The results in this research present theoretical clarification and practical guidance for managing cross-border partnerships in IJVs operating in China.