Predicting Success in Joint Venture Organisations in Information Technology

The international trend of expansion through acquisition or merger continues to accelerate across all areas of business activity with varying degrees of success. However, in certain industries, particularly Information Technology, inter-organisational collaboration and the formation of 'strategic alliances' [1 [ have become an increasingly popular, and often more suitable alternative response to the need for growth. These strategic alliances may take the form of a short term agreement to cooperate on a specific task or project, or represent a longer term commitment by the formation of a new joint venture organisation. The increasing popularity of 'joint ventures' within Information Technology has been brought about by rapid changes in technology, together with the high cost of research and development, and the growing demand for complete integrated systems. Joint venture organisations present an ideal opportunity and more suitable environment [21, particularly for the large heavy manufacturing conglomerates, to bc more entrepreneurial and facilitate a more rapid response to technological and market changes. However, although the initial relationship between joint venture partners is often considerably more cooperative than that between merger partners, or the acquisitor and the acquired, such ventures also have a notoriously high failure rate, with annual dissolution rates of 10 per cent for small start up business generally [3]. Specific studies of joint venture failure, both here and the USA [4], suggest that despite the adequacy of the financial backing they receive, tbey are highly unstable. Ventures involving research and