United Kingdom


  • Service: Advisory
  • Type: Video
  • Date: 16/07/2013
  • Length: 2:56 Minutes

JV success demands good (cross-cultural) governance 

Text version:


I believe joint ventures often fail or under deliver because of ineffective governance. That’s not to say that there isn’t any governance – there’s usually too much of it – but it fails to detect the issues early enough, and then it fails to intervene effectively.  What we see around the world is that a lot of money is spent, which is by and large ineffective, and is a cost incurred, which just gives the joint venture owners and participants a false sense of security.


If you’re seeing heavy governance with very few actual interventions, the joint venture is going off track.


I believe the cultural differences are often the make or break in a joint venture. It is commonly understood via our clients that there is a cultural barrier and many of them struggle to surmount that cultural barrier and we can help. What is less commonly understood, but perhaps more critical is that the cultural effects come into play in year two, three and four of the joint venture, after the captains and the kings have departed, the tumult has ceased, everything is operational and then one finds the joint venture very often experiences the fact that the cultural misalignments are having a significant value eroding effect further down the line.


I believe that joint ventures should be thoroughly health checked for ‘real world’ implementability before the joint venture agreement is signed.


Joint ventures are like a marriage. There’s too much focus, certainly in large business, about contracting the marriage in the first place (it’s about the wedding ceremony; it’s about perhaps the prenuptials). There’s insufficient attention, resource and capability to keeping the relationship live, to tackling issues, to working forward and keeping that marriage positive for all parties involved.


What we’re seeing now is that you have to stay with the deal, resource the deal, govern the deal, operationalise the deal, and be prepared to change course within the framework of the joint venture, repeatedly during its lifecycle.


The joint venture space will change over the coming years in a number of ways. Western companies will have to get used to being the minority partner in the joint ventures. They will have to get used to joint ventures being live entities. There is still a perception out there with a lot of our clients that once a joint venture agreement has been signed that we are looking at a deal that is going to be valid for twenty or thirty years. I think we’re going to be looking at deals that are valid for two, three or four years, and then need fundamental refurbishment. So it’s going from a static situation to a live dynamic situation where the joint venture, just like any marriage, matures, changes and is a live entity until the end of the joint venture.

Dr Marc van Grondelle, Head of KPMG’s Global Joint Venture Practice, believes that joint ventures often under-deliver due to ineffective governance and late detection of issues.  Failure to focus adequately upfront on resourcing, operationalisation and governance impedes companies’ ability to influence, intervene, adapt and develop moving forwards.


In this short video Marc considers possible actions and mitigation for some of the commonest governance failures.


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Dr Marc Van GrondelleDr Marc van Grondelle

Head of the Global Joint Ventures Practice

+44 20 7694 4603

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