Relation between business satisfaction and board dimensions in joint ventures between Spanish and Moroccan SMEs

Abstract

Businesses commonly access new markets through joint ventures, and these partnerships may adopt diverse structures of government, among which the Board of Directors often plays a key role. Accordingly, the aim of this study is to observe which characteristics of the Board most affect the success of joint ventures between Spanish and Moroccan SMEs, operating in Morocco. Using a structured questionnaire, we analyse the characteristics of the Board that affect success, as measured by the partners' satisfaction with the performance achieved. The results show that factors influencing overall partners' satisfaction with the joint venture include the existence of external directors, the existence of directors with a significant level of ownership in the partnership, the existence of an audit committee, and the (low) frequency of Board meetings. All these measures can be said to be indicators of the type of control held over the partnership, as a means of ensuring the partners' goals are achieved.

International joint ventures research on Africa: A systematic literature review, propositions, and contextualization

“…Zaheer & Mosakowski, 1997) and facilitating the deployment of the relevant expertise and capabilities to create the stability needed for the success of the IJV has been discussed in the IJV literature. In the context of Africa, empirical evidence suggests the appointment of a CEO who hails from the host country of the IJV or a CEO who understands the local market has a positive influence on the performance of the IJV (Argente-Linares et al, 2013a, 2013bGómez-Miranda et al, 2015). While Choi and Beamish (2004) did not find any significant performance differences in local partner-dominant management, we saw a significant positive role played by local partners in the performance of IJVs in Africa (Bartels et al, 2002;Boateng & Glaister, 2003;Dadzie et al, 2014;Hearn, 2015;Luiz & Charalambous, 2009).…”

“…Another study found a greater likelihood of a larger initial investment of capital in the case of IJVs with public companies than IJVs with private companies (Boateng et al, 2002). In a majority of cases, foreign CEOs and top officials were seen as a better management resource (Bartels et al, 2002); however, one case revealed that local CEOs had a positive effect on the performance of the IJV (Argente‐Linares et al, 2013a, 2013b). In addition, Banai and Akande (2005) found a difference in the case of South Africa, where the local managers preferred to hold a majority of the high managerial positions (compared to the foreign JV partners).…”

“…Within the African context, the measures adopted for IJV performance included mostly perceptions (e.g., Acquaah, 2009; Argente‐Linares et al, 2013a, 2013b; Bartels et al, 2002; Boateng & Glaister, 2002; Dadzie et al, 2014; Gómez‐Miranda et al, 2015). Only a few studies used finance‐ and accounting‐based measures (e.g., Foster‐McGregor et al, 2015), which are often considered objective.…”

“…Others argued for the significant role of local partners in enhancing the performance of IJVs, especially market‐seeking IJVs (Dadzie et al, 2014) and the service industries (Luiz & Charalambous, 2009), even in challenging institutional environments (Bartels et al, 2002). While the above‐mentioned studies focused on the strategic paths of the IJVs, authors such as Argente‐Linares et al (2013a, 2013b) and Gómez‐Miranda et al (2015) extended the study of performance to include the role and nationality of the CEO and ownership by the staff and the board of directors in IJV performance in Africa. They argued for selecting a CEO who hails from the host country or an experienced foreign national who is knowledgeable about the host country’s business environment.…”

“…• Reactivation stage: Communication and coordination. Argente-Linares et al (2013a)• Foreign partner majority ownership, management by a local CEO, and effort made by each party to adapt to the management style of the other positively influence IJV performance in Morocco Argente-Linares et al (2013b).…”