Learning from failure: Towards an evolutionary model of collaborative ventures

This paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture. We develop a model of the collaboration process in partnership and alliances based on earlier work by Ring and Van de Ven and by Doz. We employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners, and to explicate the impact that external shocks have on their perceptions of efficiency and equity. The impact of these events, as well as the responses they elicit, on the quality of the relationship (and vice versa) are also considered. We find that the partners' assessments cause them to either engage in renegotiations of the terms of the contract, or to modify their behavior unilaterally, in an attempt to restore balance to the relationship. The process feeds back until a new mutual understanding of equity is restored, or else the relationship deteriorates gradually until a point when the venture is dissolved. We conclude that positive feedback loops are critical in the evolutionary process, that relationship quality is both an outcome and a mediating variable, and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship.