Potential Risks to International Joint Ventures In Developing Economies: The Ghanaian Construction Industry Experience

Abstract

International construction companies are increasingly entering into joint ventures with local companies in developing countries to explore perceived profitable opportunities overseas. Joint ventures generally offer a number of benefits but they can become very difficult to manage as a result of many complexities introduced by the association of two or more companies from different countries, with differing political, cultural and legal frameworks, technical and managerial capabilities, and national economic environments. This theoretical study assesses the risks associated with International Construction Joint Ventures in developing economies with particular reference to Ghana. The nature, strengths, weaknesses, opportunities and threats within the Ghanaian construction industry were reviewed. The economy, governance, business environment, infrastructure, resources, etc. of Ghana were also assessed. The main risks factors to International Joint Ventures (IJVs) identified in Ghana can be categorised into two: major risk factors including the microeconomic and financial risk factors and joint venture partner problems. The client’s ability to finance the projects and poor technical, financial and managerial capacities of Ghanaian construction firms were the main factors in this group. The minor risks factors include the availability and high cost of construction materials, issues of bribery and corruption, power supply problems and security.