Article at a glance:

Governing joint ventures

Few joint ventures employ the same standards of governance that have become common to their corporate parents. As a result, weak governance leads many ventures to fail or fall short of expectations because of divided loyalties, gridlock, weak performance management, mistrust, and stagnation. Despite the challenges of governing joint ventures—often stemming from their divided structure and the conflicting priorities of their parent companies—it is possible to develop a set of guidelines for joint-venture governance against which companies, and perhaps their public shareholders, can assess performance.

The take-away

Joint-venture-governance guidelines should promote accountability, transparency, simplicity, and speed. Where possible, they should also encourage operational independence from corporate parents, which tends to encourage all the desired traits in good governance.