Board Leadership Structures in International Joint Ventures

Jeffrey Reuer, E. Klijn

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Research summary: We examine board leadership structures in international joint ventures (IJVs) and investigate the determinants of CEO duality (i.e., the CEO also serves as chair). In contrast to corporate governance research emphasizing principal-agent conflicts in corporations, we argue that duality in IJVs can impair the board's execution of its responsibilities when the chair reflects the interests of one of the partners. We consider how unique characteristics of IJVs as organizational forms can exacerbate such governance challenges. In addition, we investigate how formal and relational governance mechanisms supporting IJVs might mitigate these concerns and lead parent firms to adopt unified board leadership structures. By joining the IJV and corporate governance literatures, we identify some of the distinctive properties and determinants of this facet of IJV governance. Managerial Summary: A key facet of governance is whether the CEO also serves as chair of an organization's board. CEO duality can promote unity of command and decisive decision-making, but can also have serious drawbacks. Our paper is unique in investigating CEO duality for international joint ventures (IJVs) rather than unitary corporations. In this context, the chair might prioritize one partner's interests over another partner's, particularly when the chair was appointed by that partner. This problem magnifies when IJVs are prone to conflicts or need to be adapted, so partners might wish to separate the CEO and chair roles when engaging in IJVs involving broad scope or operating in uncertain environments. However, well-specified contracts can limit CEO discretion and protect partners from these downsides of duality.

Original languageEnglish
Pages (from-to)700-725
JournalGlobal Strategy Journal
Volume10
Issue number4
DOIs
Publication statusPublished - 2020

Keywords

  • CEO duality
  • alliances
  • boards
  • corporate governance
  • leadership

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