Based on an inductive, longitudinal case study, this paper proposes a framework of joint venture development. The framework is comprised of three overlapping stages of development: formation, adjustment, and evaluation with shorter, cyclical periods. These periods, labeled phases, can be described in terms of alternations between divergence and convergence of two types of group relationships: intra-joint venture relations and boundary group relations. Propositions lay out the development from the formation to the evaluation stage explaining the cyclical nature of divergence and convergence. The framework advances the existing literature on joint venture development by pointing out both micro-and macro-level driving forces and the conditions under which certain developmental patterns emerge.
As a result of increasing turbulence, competitive pressure, and globalization, companies have started employing co-operative strategies to cope with changes in the environment (Arino and Torre, 1998; Contractor and Lorange, 1988; Hergert and Morris, 1988). Although the literature on co-operative relationships has been growing, it has been suggested that emphasis should shift from learning 'how to set up a cooperative arrangement' to 'how to successfully manage the dynamics of these inter-organizational relationships ' (Arino and Torre, 1998; Parkhe, 1993; Ring and Van de Ven, 1994). Previous investigations on co-operative arrangements have tended to focus on the outcome, the antecedents, and governance structures, and do not adequately recognize the importance of process (Gulati, 1995; Parkhe, 1993; Ring and Van de Ven, 1994).Studies taking a dynamic perspective of co-operative arrangements can be classified into those emphasizing the formative process, those predicting the level of co-operation and finally those paying attention to their evolution over time. The majority of research has focused on the formation taking a traditional economic perspective (Hennart, 1988; Kogut, 1988a). The main argument put forward is that companies can acquire skills and knowledge that they find difficult to develop internally. From this perspective, co-operative arrangements are viewed as an
