Performance in International Construction Joint Ventures: Modeling Perspective

Abstract

This paper reports on a self-reported survey of performance in international construction joint ventures formed and operated by Australian and British contracting organizations. Based on previous studies, a questionnaire survey was developed to investigate the relationships between reported risk and success factors, and the performance of ventures. Through structural equation modeling, the paper empirically examines the effect of key processes such as partner selection, venture formation, and operation on venture performance. The results provide evidence that local partner attributes influence venture formation which, in turn, is strongly and positively related to its operation. These results also suggest that the negative impact of host government-related risks on venture formation is direct, while their impact on venture performance is indirect, through creating a “less certain” operating environment. Project-related risks appear to have strong and negative dual “direct and indirect” effects on venture performance. Based on these empirical results, the paper advocates that selecting a suitable complementary local partner and adopting a proactive risk management strategy are vital antecedents to successful venture performance.