Impacts of Governance Structure Strategies on the Performance of Construction Joint Ventures

Abstract

In the construction industry, construction joint ventures (CJVs) have become one of the major organizational forms utilized in large-scale projects. However, because of the complexity of CJVs, the management of CJVs is much more difficult than that of usual projects undertaken by a single construction firm. Ineffective management and cooperation in JVs usually lead to poor performance. This study aims to investigate the performance impacts of governance structure strategies. In particular, this paper addresses two issues by empirically examining (1) the relationships between governance structure fit and CJV performance, and (2) whether jointly managed JVs (JMJs) and separately managed JVs (SMJs) perform equally well while holding the same level of governance structure fit. First, it is confirmed that governance structure fit has significant positive impacts on CJV performance. Second, it is found that JMJs perform slightly better than SMJs, all else being equal. Strategy implications based on the empirical results are also proposed and discussed in this paper. This paper contributes to the construction management literature by providing empirical evidence on the importance of governance structure fit and on the relative performance impacts of JMJs and SMJs. The results may also help practitioners by providing the guidance for organizational governance choices in CJVs.