Are JVs a $1 Trillion Missed Opportunity?
By Gerard Baynham | Tuesday, November 14, 2017
Much is written about the unattractiveness of joint ventures. Barely a week goes by without a breakup appearing in the press. This summer, McDonald’s announced the termination of its joint venture in India and Starbucks terminated its joint venture in Taiwan. Management guru Peter Drucker captured the sentiment of instability years ago when he wrote, “Businesses used to grow in one of two ways: from grassroots up or by acquisition. In both cases, the manager had control. Today, businesses grow through alliances, all kinds of dangerous liaisons and joint ventures, which, by the way, very few people understand.”
Our research, however, tells an entirely different story: it shows that CEOs continue to flock to growth via organic investments and acquisitions, despite joint ventures generally yielding superior returns.
Keywords: Joint Venture Performance Data, Joint Ventures Compared to Wholly Owned Assets, ROA Comparison, Investment in Joint Ventures.