Institutional dimensions and conflict resolution strategy in international joint ventures: An empirical examination

• Date: 01 July 2018
• Author: Samuel Ato Dadzie,Alphones Mawusi Kwasi Aklamanu,Amoako Kwarteng,Samuel Famiyeh
• DOI: http://doi.org/10.1002/tie.21966
• Published date: 01 July 2018

EMERGING MARKET PERSPECTIVES: AFRICA

Institutional dimensions and conflict resolution strategy in

international joint ventures: An empirical examination

Amoako Kwarteng | Samuel Ato Dadzie | Samuel Famiyeh |

Alphones Mawusi Kwasi Aklamanu

Ghana Institute of Management and Public

Administration (GIMPA), Accra, Ghana

Correspondence

Amoako Kwarteng, Ghana Institute of

Management and Public Administration

(GIMPA), P.O. Box AH50 Achimota, Accra,

Ghana.

Email: akwarteng@gimpa.edu.gh

This study examines the impact of the host-country institutional structures on the choice of

conflict resolution strategy in the international joint venture (IJV). Using the survey method

and relying on multiple regression, we demonstrate that there is a statistically significant rela-

tionship between institutional pillars and the choice of conflict resolution strategy in the inter-

national joint venture in the context of Ghana. In particular, we demonstrate that legalistic and

forcing conflict resolution strategies are influenced by the regulative institutional pillar, while

compromising and problem-solving conflict resolution strategies are impacted by normative

and cognitive institutional pillars. The multigrouping analysis results show that the views and

the choice of foreign partners on conflict resolution strategy differ from that of the local part-

ners to the IJV. This study fills the gap by empirically testing the conflict resolution strategies

of firms in relation to the role of regulative, normative, and cognitive institutional pillars of the

host country.

KEYWORDS

conflict resolution strategy, culture, Ghana, institutions, international joint venture

1|INTRODUCTION

Conflict resolution strategies have received considerable attention in

research on the international joint venture (IJV) (Black & Mendenhall,

1993; Fey & Beamish, 1999; Koot, 1988; Lin & Wang, 2002).

Research has suggested that cultures differ in their preferred form of

handling conflict (e.g., Chen, Ryan, & Chen, 2000; Chua & Gudykunst,

1987; He, Zhu, & Peng, 2002; Morris et al., 1998). The managerial

importance emanates from the fact that partners to the IJV adoption

of different conflict resolution strategies not only affect the immedi-

ate resolution of specific disagreement, but there are also serious

relational consequences (Lin & Wang, 2002). Due to dissimilarity in

institutional structures between the IJV partners, efforts by each IJV

partner to resolve conflicts may become the most serious sources of

conflict because each side usually tries to resolve them by adopting

methods that have proven successful in their own country (Black &

Mendenhall, 1993). According to Hall and Soskice (2001) and Gel-

buda, Meyer, and Delios (2008), it is advantageous for an organiza-

tion and its participants to situate their activities and procedures

within the institutional environment in which they work. Firms that

follow procedures that deviate from institutional pressures in an

environment usually encounter increased transaction costs in con-

ducting business within that environment. Firms are therefore likely

to develop structures and policies that align with the institutional

pressures they face, since such practices lead to legitimacy and a

competitive advantage in their host environments.

With the increasing number of multinational companies and

international alliances, understanding the cross-cultural differences

and institutional framework of the host country in conflict manage-

ment has become increasingly important (Brett, Tinsley, Shapiro, &

Okumura, 2007; Holt & DeVore, 2005; Kozan, 1997; Tinsley & Brett,

2001; Wahyuni, Ghauri, & Karsten, 2007; Seyoum, 2009). As many

businesspeople have discovered, ineffective negotiations and poor

conflict management often contribute to problematic international

operations (Adler, 1997; Brett et al., 2007; Gammelgaard, Kumar, &

Worm, 2013).

As firms increase their business activities abroad, they often

become involved in international joint ventures (IJVs) with local firms

(Ding, 1997; Duan & Chuanmin, 2007; Dunning, 1995; Li, 2003;

Meschi & Riccio, 2008). Several studies show a high rate of IJV fail-

ures (Bamford, Ernst, & Gubini, 2004; Hennart, Kim, & Zeng, 1998;

Yeheskel, Newburry, & Zeira, 2004) and there are several reasons for

DOI: 10.1002/tie.21966

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