The purpose of this study is to evaluate empirically the proposed model by examining whether the JVs and their governance decisions in these cases replicate the logic underlying the model. Table 7 summarizes the results tabulated in Tables 3 to 6 and how the model is supported. In this case study, we’ve obtained six JV cases that demonstrate, in our opinion, very strong support for the model. As shown in Table 7, the six JVs are C210/C215, C230/C240, C260/C270, C280, C291/C296, and C295. We’ve also obtained one JV case, C220, that is marginally supportive and one, C250, that is neutral.
As shown in Table 7, among the six JVs that strongly support the model, four adopted JMJ, as predicted by the model, one adopted SMJ also as predicted, and the other supports the model by the correlation between the JV’s early dissolution and the JV’s
“inappropriate” governance choice. Furthermore, the JVs with marginal and neutral support, C220 and C250, respectively, though showing much weaker support, are by no means contradicting the proposed propositions. As shown in the column “Supportive or Not?” in Table 7, we conclude that the JVs in the THSR project reasonably support the proposed model for the choice of organizational control structure.
[Insert Table 7 here]
7. Conclusions
The ability to make proper decisions for ICJVs is critical to the success of not only international construction firms but also the local firms, which may lead or be invited to join an ICJV in local projects. Among those decisions concerning ICJVs, the choice of governance structure has a profound impact on the JV performance but receives relatively few attentions. This paper empirically evaluates the model proposed in Part (I), which investigates the organizational control choices. The proposed model integrates the transaction cost economics (TCE) view and the resources-based view (RBV). From the TCE perspective, it is hypothesized that a lower level of cultural difference and a higher level of trust will favor the use of JMJ, and vice versa. From the RBV perspective, it is hypothesized that lower needs for procurement autonomy and a higher level of motivation for learning will favor the use of JMJ, and vice versa. In this paper, a case study of a mega transportation project, Taiwan High Speed Rail project (THSR), was conducted to evaluate the proposed model. Using case study as a research methodology, we take the view that case study is an empirical inquiry and an important research methodology in management and social sciences. Through the study of eight ICJVs in THSR project, these cases replicate the linkage between the hypothesized governance determinants and the predicted control structures and reasonably support the proposed model. Lastly, an econometric study can be further conducted in the future to statistically test the proposed model.
ACKNOWLEDGEMENTS
We greatly appreciate the help and data offered by the participating professionals from the JV firms of THSR. Financial support from the National Science Council (NSC 95-2221-E-002-321) is gratefully acknowledged.
Fig. 1. The Integrated Model for Organizational Control Structure Choices
Table 1. JV Teams/Partners and JV Governance
ICJV Partners and Organizational Control Structures
JV Team Foreign Partner Local Partner
Obayashi (Japan) Fu Tsu JMJ PM: Obayashi, Vice PM: FuTsu
C220 Daiho (Japan) Chiu Tai Kou Kai
SMJ PM: Daiho. Local partners stepped out due to financial distress
Pan Asia JMJ PM: Hochtief, Vice PM: Ballast Nedam and Pan Asia
PM: CEC, Vice PM: Bilfinger Berger (in C270)
C280 Samsung (Korea) Doosan (Korea)
IE&C SMJ PM:Samsung, Vice PM: Doosan and IE&C
C291 C296
Shimizu (Japan) Evergreen JMJ PM: Shimizu, Vice PM: Evergreen
C295 Italian-Thai (Thailand)
Evergreen PEWC
JMJ PM: Italian-Thai, Vice PM: Evergreen and PEWC
Table 2. Contracts, Contract Costs and Equity Investment Ratios Contract Contract Costs
(thousand USD )
Equity Investment Ratios
C210 378,788 Obayashi：Fu Tsu＝55%：45%
C215 561,242 Obayashi：Fu Tsu＝55%：45%
C220 369,697 Daiho：Chiu Tai：Kou Kai＝40%：30%：30%
C230 368,788 Hynudai：Chung Lin ＝75%：25%
C240 342,930 Hynudai：Chung Lin＝80%：20%
C250 686,364 Hochtief：Ballast Nedam：Pan Asia ＝55%：30%：15%
C260 575,151 Bilfinger Berger：CEC＝50%：50%
C270 653,636 Bilfinger Berger：CEC＝50%：50%
C280 496,939 Samsung：Doosan：IE&C ＝51%：29%：20%
C291 399,909 Evergreen：Shimizu＝58%：42%
C295 454,485 Evergreen：Italian-Thai：PEWC＝50%：35%：15%
C296 80,303 Evergreen：Shimizu＝58%：42%
Table 3. “Cultural Difference” Between Partners in Each JV JV Team Assessed level of
cultural difference
C220 Moderate Inconsistent.
Foreign: focusing on project quality and the profit of the
Local: focusing more on JV.
Foreign: collectivism and strong leadership.
Local: individualism. Work overtime should be
Focusing on quality. Moderate. Partly due to foreign partner’s sense of superiority.
C280 High Inconsistent.
There were considerable disagreements between two foreign partners due to their different engineering backgrounds/specialties and the change of business roles.
Minimal
Table 4. “Trust” Among Partners in Each JV JV Team Assessed level
of Trust Bases of Trust C210
C215
High Past cooperation.
Partners’ good reputation.
C220 Moderate Mainly from credit information service.
However, it is also a known fact that the financial information of small firms from credit information service may deviate from the actual situations substantially.
C230 C240
Moderate Mainly from credit information service.
C250 Moderate Partners’ good reputation.
C260 C270
High The foreign partner’s good reputation.
The local partner is the THSR’s major shareholder.
C280 Moderate Past cooperation.
However, the local partner was wary about the
disadvantages due to her weak position in equity share and joint decision-making.
C291 C296
High Shimizu’s good reputation.
Evergreen is the THSR’s major shareholder.
C295 High Italian-Thai is among the ENR top 150 international contractors and has a good reputation.
Evergreen is the THSR’s major shareholder.
Table 5. “Needs for Procurement Autonomy” in Each JV
How the procurement decisions were made?
Is the procurement time efficient?
C210 C215
Moderate Decisions: divided and joint procurement.
Division of procurement: based on partners’ procurement advantages.
Managers are fully delegated.
Yes
C220 Moderate Decisions: divided procurement. The local partners stepped out.
C230 C240
High Decisions: divided and joint procurement.
Division of procurement: based on partners’ procurement advantages.
Managers are inadequately delegated.
C250 Moderate Decisions: divided and joint procurement.
Division of procurement: by partners’ procurement advantages.
Managers are fully delegated.
Yes
C260 C270
Moderate Decisions: divided and joint procurement.
Division of procurement: by partners’ procurement advantages.
Managers are fully delegated.
No.
Extensive negotiation is involved.
C280 High Decisions: mostly independently made.
Moderate Decisions: divided and joint procurement.
Division of procurement: by partners’ procurement advantages.
Managers are fully delegated.
Yes
C295 Moderate Same as C291/C296. Yes
Table 6. “Motivation for Learning” in Each JV
joining this JV? What to be learned?
C210 C215
High Yes For foreign partner: to learn the procurement and business practices in Taiwan market.
For local partner: to learn tunneling techniques
For local partner: to learn project management.
C250 Low No Nothing in particular.
C260 C270
High Yes For foreign partner: to learn seismic design for high speed rail civil works.
For local partner: to learn tunneling techniques.
C280 Moderate Yes For Samsung: nothing in particular.
For Doosan: to learn how to conduct business in Taiwan.
For IE&C: to learn from Samsung the construction techniques and
For local partner: to learn construction management and special techniques such as the removal of hazard underground pipelines.
C295 High Yes For foreign partner: to learn the procurement of materials and subcontractors in Taiwan.
For local partner: to learn project planning and construction management.
Table 7. Overall Evaluation of Proposed Propositions
b (J): the assessed level favors JMJ; (S): the assessed level favors SMJ; Moderate level is considered not favoring JMJ or SMJ.
c The net number of determinants that favors the chosen control structure, ranging from (+4) to (-4).
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