Ideas with Impact
UNB Faculty of Management

Companies looking to pursue ambitious opportunities often form joint ventures to pool expertise, resources, and share risks. While joint ventures are attractive, they can frequently end poorly for various reasons. However, a recent study by Dr. Lucas Wang, a business professor at the University of New Brunswick’s faculty of management, suggests that the corporate social responsibility (CSR) practices of one partner can significantly mitigate the risk of joint venture failure.

Dr. Wang's paper, titled “Does Responsibility Breed Stability? An Institutional Framework on the Link Between Partner Corporate Social Responsibility and Joint Venture Termination,” was published in the Journal of Business Research. He co-authored the study with Dr. Qing Dai Wenzhou-Kean University.

“Our study found that a partner’s CSR can reduce the likelihood of unexpected joint venture termination and extend its longevity, “said Dr. Wang. “This is because a partner’s CSR enhances the joint venture’s legitimacy, which in turn helps secure various endorsements and support from stakeholders.”

The study indicates that the stabilizing effect of a partner’s CSR is especially pronounced in the early stages of a joint venture, when the partner holds greater ownership or is a private enterprise (as opposed to state-owned), and when both the partner and the joint venture operate within the same industry.

Dr. Wang believes these findings have meaningful implications for both partner selection and the management of joint ventures. He notes, “Traditionally, firms have focused on financial and technical strengths when choosing suitable partners. Our research highlights that the CSR of a potential partner also deserves attention. A responsible partner can help the co-owned business thrive, while an irresponsible one could jeopardize its success.”

While a partner’s CSR can effectively promote the legitimacy of a joint venture, it is an indirect form of legitimization. Dr. Wang and his co-author recommend that the joint venture itself engage in CSR activities once the collaboration begins. This proactive approach will help maintain and strengthen the legitimacy and stability of the joint venture granted by a partner’s CSR at the outset.

Dr. Wang is an assistant teaching professor in the faculty of management. His research focuses on global strategy, governance of cross-border cooperation and corporate sustainability. He teaches strategic management in the BBA and MBA programs and business planning and entrepreneurship in the BBA program. He is an award-winning case writer, with numerous cases published in premium outlets like Ivey Publishing and Harvard Business School Publishing.

Photo: A recent study by Dr. Lucas Wang explores the benefits of corporate social responsibility in joint ventures.

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For more information about this story contact Liz Lemon-Mitchell.