Ownership and control in joint ventures

Abstract

To run a joint venture effectively and without conflicts has in several cases proven to be problematic. The need for good relationships between the partners is therefore necessary. It is of great importance that the partners' objectives and contributions to the venture are clearly described and the control and ownership structure of the joint venture is properly defined.

A current example where conflicts occurred is the joint venture AutoNova, originally owned 51% by TWR Group Ltd. (TWR) and 49% by Volvo Car Corporation (VCC). AutoNova was founded in 1995, but already in 1999 serious conflicts between the two owners occurred. The thesis starts by presenting these conflicts actual in the case of AutoNova. A comprehensive theoretical framework relevant to the actual case including the ‘concept of ownership', ‘control mechanisms', ‘ownership structure design' and ‘vertical relationships' is presented. Based on the empirical findings and the theoretical framework, the analysis chapter presents how the conflicts were handled and how the ownership structure has affected the control mechanisms and the relationship between the two owners. The analysis leads to the factors that really caused the conflicts.