Joint Ventures and Competitive Strategy

A framework is presented for using joint ventures within varying competitive environments, and hypotheses are developed concerning the impact of particular industry traits upon companies' options in pursuing them. Industry examples illustrate the hypotheses. In the framework, demand traits indicate what types of cooperative strategies are needed. Competitor traits indicate how firms will respond to these needs for cooperation. The key environmental traits to consider when formulating cooperatives strategies are: 1. demand uncertainty, 2. customer traits, 3. infrastructure development, 4. production technology, 5. the volatility of competitive behavior, and 6. the nature and extent of linkages between the venture and its owners. Effective joint venture strategies must adapt to the forces exerted by these 6 traits. The form, focus, autonomy, and duration of firms' cooperative strategies will differ from industry to industry because of these traits.