The Mating Dance: a Case Study of Local Partnering Processes in Developing Countries ANNE SMITH, Assistant Professor of Policy, McGill University, Montreal; MARIE-CLAUDE RENEY, Doctoral Student of Strategy, University of Quebec at Montreal
The selection of local developing countries is issue for telecommunica from developed countrie~ in these companies know tion of the right local partr to placing a winning bid fq telecommunications proj they are frustrated by box' of local partner selec
In I990, the Mexican telephone company Telmex was privatized and awarded to a consortium consisting of Southwestern Bell, France Telecom, and Grupo Carso (headed by Mexican industrialist Carlos Slim). Many entities representing different telephone companies from around the world competed for this privatization. A North American manager in one of the losing consortia bemoaned this defeat: 'Our top management was very interested in winning this privatization, but we chose the wrong partners in Mexico.
cr partners, we could never gain momentum or put together a viable bid for this project' (Smith and Zeithaml, 1993).
The importance of selecting the 'right local
artners' was critical to EX's entry into Thailand 90s. This North American ~amed up with Charoen influential agricultural
;1 made a fortune in chicken million phone lines in
~ai government wouldn't ;e, but they would award .. because they have
connections, money, contacts,' said an industry analyst
(Brauchli and Strassel, 1995).
These accounts demonstrate the importance of partnering relationships for tele- communications service firms as they pursue global telecommunications opportunities in developing coun- tries. In many developing countries, governments are opening up their telecommunications infrastructure to joint ventures that include both domestic and foreign partners. Past experience has shown that as North American and European telecommunications firms compete vigorously with each other in different consortia for these investment opportunities, the choice of partners, especially local partners, is critical to
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A CASE STUDY OF LOCAL PARTNERING PROCESSES IN DEVELOPING COUNTRIES
developing a winning consortium. According to many North American and European managers we interviewed in our research on telecommunications firms and their international expansion processes, selecting local partners in developing countries is probably also one of the most important but misunderstood aspects of international expansion.
While there has been extensive academic research on criteria used by firms for partner selection (Beamish, 1985 and 1987; Geringer, I988a,b; Lasserre, 1984; Tomlinson, 1970), there is a demonstrated need for more academic research into the processes of foreign partner venture formation (Geringer and Frayne, 1993; Lorange and Roos, 1992; Parkhe, 1993; Zahra and Elhagrasey, 1994). Our research shows that the partnering process is not a linear execution of a rational plan, but rather a process of personal relationship- building, or, in the words of several academic researchers and managers, a 'mating dance' (Berg and Friedman, 1980; Harbison and Pekar, 1993).
The Partnering Process: One Firm's Experience
We explored the all-important partnering process through an in-depth case study of a telecommunications service firm that was deeply involved in joint ventures in developing countries from 1989 through 1994. This was a time of tremendous global expansion opportunities in the telecommunications service industry. The firm was one of the largest telecommunications service providers in North America, and, because of our commitment to their anonymity, we refer to the company as Namtelco. We conducted in-depth field interviews with eight of the highest ranking managers in its international subsidiary. These managers were responsible for and closely involved with Namtelco's international expansion and investment in emerging services opportunities around the world, as opposed to sales of Namtelco's telecommunications hardware. These interviews were conducted with managers located in Namtelco's North American headquarters and in their two European subsidiaries. Each manager had significant experience internationally and was involved in numerous partnering efforts with local firms in developing countries during the 1989-94 period. Their positions are briefly described below, again not using their real names:
Eric: CEO of this subsidiary; substantial international experience and involvement in partnering efforts over the past two years. John: Over ten years of involvement in this company's international telecommunications operations. David: Involved in several bids for privatizations of telephone companies in developing countries; currently involved in partner selection in international ventures. Sam: Over ten years of involvement in international telecommunications operations. Kathleen: Involved in operating a large venture
outside North America, but previous experience in developing country projects. Richard: In charge of planning and strategy for the international subsidiary; extensive involvement in international expansion both in developed and developing countries. Robert: Involved in negotiating the specifics of the financing and the shareholder agreement with local partners in both developed and developing countries. Harold: Substantial international experience; involved in negotiating the specifics of the financing and the shareholder agreement with local partners.
Each interview lasted between one and two-and-a-half hours. These interviews, combined with an in-depth analysis of archival records on all of Namtelco's international expansion activities between 1989 and I994, gave us a complete view of their many local partnering processes.
Our study of Namtelco's local partnering process in developing countries revealed a series of four dilemmas confronted as it attempted to forge partnering relationships in many different developing countries. These four dilemmas - finding potential local partners, determining operational fit, assessing compatibility, and detailin~ the project - are discussed in detail in the next' section.
During the period 1989-94, Namtelco's international managers assessed many investment opportunities in developing countries. During this six-year interval, Namtelco's international managers investigated over forty opportunities in thirty-eight developing countries and attempted to find potential local partners for them. After the initial investigation, many potential projects and/or partners were not pursued further. For about half of the opportunities initially investigated, the international managers faced the second dilemma in sixteen countries of determining which local company provided an operatibnal fit with their firm. For about ten of the opportunities pursued in nine countries, Namtelco's international managers were faced with the third dilemma, assessing the local firm's compatibility with the firm. In six developing countries, managers also faced the fourth dilemma of detailing the project, but lost two of these six opportunities to competing joint ventures. The result of these partnering efforts was that at the end of 1994 the firm had four active, successful joint ventures with local partners in four developing countries.
Finding, selecting, and committing to local partners, as represented in Figure 1, was not a linear nor smooth progression. Instead, Namtelco managers faced a high level of uncertainty when they initially investigated a new opportunity in a developing country. This uncertainty decreased over time, however, as the dilemmas were confronted and reconciled through increased knowledge of a particular country and the local companies.
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A CASE STUDY OF LOCAL PARTNERING PROCESSES IN DEVELOPING COUNTRIES
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Figure 1 Representation of Local Partnering Processes in Developing Countries
Dilemma 1: Finding Local Partners
During the late I980s and early I990s, Namtelco's international subsidiary was constantly bombarded by potential investment opportunities around the world. Investment bankers, government agencies, other subsidiary managers of the North American firm, and even embassy officials would contact the international subsidiary about opportunities in developing countries. Because of their lack of international experience in many countries and the vast number of deals they were evaluating, managers at Namtelco's international subsidiary experienced confusion and lack of clarity about which opportunities to pursue. Even after five years of intensive international investment involvement, the screening mechanism for the variety of deals around the world was not firmly established. David confirmed this: 'each time we enter a new market, especially a developing country where we have no specific experience, we are anxious about whether or not we should pursue an investment opportunity there.'
As opportunities were encountered, top managers in Namtelco's international subsidiary would sometimes send a few international managers to investigate potential countries and telecom projects and to meet local firms in some countries. While these exploratory visits were extremely expensive, they were critical to beginning the process of connecting with local firms and powerful families in a developing country. As Kathleen said: 'the only way to find a partner is by being there. You have to be in the network or know someone who is.' 'Getting connected to important families in these countries is critical,' commented David.
In a few countries, another Namtelco subsidiary had
been involved in telecommunications hardware activities, so managers in the international subsidiary were able to use some previous relationships of this affiliated subsidiary. Yet, as Eric explained, 'We had to be careful about aligning ourselves too closely to [this subsidiary] because we needed to develop our own identity for the activities that we are pursuing ... Also, [the subsidiary] may not have made a favorable impression in a country, and we certainly did not want to be affiliated with that.'
Distinguishing the Good Bandits from the Bad
In many countries, the company became acquainted with intermediaries, referred to by the managers as 'bandits'. These bandits were not potential partners, but introduced or promised to introduce the North American managers to prominent managers of local firms. Initially, it was difficult for the Namtelco managers to discriminate between bandits and potential partners. As John explained, 'These intermediaries are well-connected, smooth, but many of them are sleazy ... Bandits have information that you pay for in consulting fees.' The managers in the 'hunting expeditions' had to learn which were good bandits and which 'could hurt your chances of connecting with viable partners.' Sam elaborated:
You have to be careful early on who you are dealing with in these countries. Some partners or country contacts may look good, but they never deliver. We found out one of our former bandits was wanted by Interpol. What usually happens, however, is that you decide to leave the relationship with a bandit because of inactivity . . . but you become afraid that you are leaving the relationship right when it may finally pay off and the bandit knows how to reel you back in with offers of meeting prominent businessmen and you succumb.
Putting people on the ground to pursue international projects in developing countries also allowed for chance encounters and serendipitous connections. 'One of our managers traveling to a Latin American country met an important business leader in this country on the plane trip,' David remarked. In other instances, managers made contact with local firms through social activities. Sam, who was involved in several of these exploratory visits, elaborated: 'We found partners here through introductions at dinner parties, tennis games, and other social activities.' Often, being introduced to one important manager led to introductions to the 'rest of his family and their network of affiliated companies,' according to David. Eric provided an example of this domino effect in one country:
We began by flirting with [a large State-owned company] because they had to get rid of some parts of their operations .. . we were interested in an association. So, we were introduced and began initial discussions. Meanwhile, another opportunity developed in this country .. . We found out that a company wanted to get rid of its cable ventures, so we pursued this opportunity . . . While we were in the initial discussions with this company, we found an affiliated firm who was
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involved in several ongoing telecommunications services. This final encounter developed into a potential partnership because of the good assessment and flexibility by the people on the ground ... We are still in the midst of pursuing this opportunity.
With a physical presence in the country, the managers were able to react rapidly to new opportunities and to become connected to many local firms.
Outcomes and discussion The discovery of potential partners was not a straightforward, linear process. Rather, the initial investigation in a country was characterized by chance encounters, unsolicited bandit advances, and social and family network introductions. Partner selection was aided by past associations in a country by another Namtelco subsidiary and the interconnectedness of the family network of companies in many developing countries. Namtelco international managers realized that potential partners could be found through previous corporate connections, bandits, or meeting a key member of a family network in a social functions. The outcome of these explorations in developing counties was that, in some instances, managers from Namtelco decided to walk away from countries if the telecommunications projects and/or partners did not seem promising. In other instances, the company found that some countries had positive telecommunications investment opportunities and determined that some local firms were viable partners for these potential investments. These local firms were then scrutinized by Namtelco international managers for their operational fit.
Dilemma 2: Determining the Operational Fit
After a set of available local firms had been identified in a country, Namtelco managers began to evaluate their skills and abilities - their operational fit. 'Functional complementarity is a natural basis for selection,' said Eric. 'We ask ourselves: How do they complement us? What do they bring to the table? What is the fit? What can you contribute to our welfare?' Sam explained. According to several managers, the local firm's knowledge of the country and its government connections were crucial. On the flip side, it was also important that Namtelco sell itself to prospective local firms.
'Early on in identifying partners,' David stated, 'we are less concerned with their telecom knowledge and personality, but more concerned with their ability to bring their knowledge of labor and market conditions, local knowledge, into the partnership.' Assessing a firm's operations is a straightforward process when the firm is public; its finances, balance sheets, and a demonstrated track record are fairly easy to obtain, said David. But when a local firm was part of a family-affiliated, cross- owned network of companies, for instance, determining
the operational fit was more difficult. 'We check their operational and financial background, and do a lot of fact-finding, but sometimes the information is just not there.' Often the assessment of the local firm's degree of local knowledge and their government connections had to be subjective. Namtelco managers would seek out the opinions of expatriates or embassy officials, gauge the involvement of a family in government politics, or talk tactfully to government officials.
One Suitor Among Many
While the company's managers were gathering detailed information about local firms in a developing country, it was also selling itself to local firms as a legitimate suitor. In some cases, after the hunting expeditions identified a set of potential partners, Namtelco managers found that several were unavailable to become telecom project partners. Sam described the situation in one Latin American country: 'Many local firms, it turns out, were already taken. The Swedes were already very strong because they had been in there for many years selling their equipment. We are never first anywhere. There is always another strong telecommunications company who has already made in-roads.'
'You have to realize in these countries that everyone is talking with everyone else,' David explained. 'A lot of partnering is co-selection, mutual linkage ... we pick a local and a local picks us.' This self-legitimization and skill-selling, according to David, is vital in establishing partnerships, especially in Asia. As he put it, 'Patience, perseverance and positioning is required in developing viable partnerships in these countries.' Eric elaborated: 'Legitimizing oneself is very important ... we had a lot of presence on the ground. Sometimes, we used our family connections [other subsidiaries of this North American company involved in international activities] and pointed to them to legitimize us in our international partnership pursuits.' Making the managers' and the firm's capabilities known, and establishing Namtelco's identity as 'more than a financial arm' was clearly important at this stage.
Outcomes and dbcussion The process of determining an operational fit highlighted the criteria of identifying operational and financial resources of local firms and understanding the local company's knowledge of the market and government connectedness. At the same time, Namtelco managers found themselves trying to legitimize their company as a viable partner for the local firms. In some countries, the efforts of Namtelco was negative and the process came to a halt, perhaps because the telecom venture was not taking shape in the developing country, no local partners were found to provide an operational fit, or no local firm selected this North American firm as a partner. The successful resolution of this dilemma was the development of a preliminary relationship with one local firm that offered a reasonable operational match with the North American firm. Once this happened, the
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intangible question of compatibility had to be addressed by Namtelco managers.
Dilemma 3: Assessing Compatibility
Namtelco's international managers encountered the third dilemma when they came closer to putting together a final partnership as the bid deadline approached for a telecommunications opportunity in a developing coun- try. This was choosing a partnership that offered a good cultural and personality fit and would not end in conflict and divorce. As John explained, 'In all international relationships, there are hard and soft aspects. The hard aspects are the rational aspects, such as their numbers and operational knowledge. The soft aspects reflect the ability to size up a partner. Assessing these soft features is an entry barrier because it takes time to learn and develop experience and feel for international partners.' Understanding the soft aspects required the determination of the 'cultural fit, the ability to work together, "gut feel", and chemistry among managers,' said Robert. 'You must like your partners ... it's key.'
Determining compatibility was not a straightforward process. David explained: 'You need to become very comfortable with a partner, to trust, to be happy with them, because there are inevitably going to be rough spots in the relationship and you have to ask yourself, "Is it worth building a relationship with this partner?"' Richard described the personality of his company: 'We are not loud folks, we don't beat up on locals, we have a quiet way of doing things ... what is critical is finding partners who appreciate our values and get along with personalities at the top of our organization.'
A critical concern of the international managers was whether the two parties could manage a telecom- munications service venture without inordinate conflict. While managers in the international subsidiary had narrowed the choice to one partner, the CEO of the international subsidiary had the ultimate power to approve whether or not to pursue a venture with a particular local firm. In turn, the CEO of the international subsidiary had to be concerned with the power of Namtelco's board of directors to veto a project or partner in a developing country.
A Question of Comfort and Credibility
The interviews provided tangible clues about how the company assessed the values and organizational culture of and their overall comfort with a potential partner. According to John, signals of 'elegance and manners' were part of the North American firm's assessment:
We spend time with the top management team and look for signs of their underlying core values ... do they promptly answer our telephone calls, have someone meet us at the airport, do they entertain our ladies, have us to their homes for dinner, bring a gift for our secretary? Do they look out for
you? All these little things are representative of their respect for you and their values.
The type of communications the local firm preferred also indicated their potential compatibility. Eric explained that a positive relationship with a partner meant spon- taneous communication: 'We prefer not to communicate through letters from our lawyers or starchy memos. Instead, I like it when I can pick up the phone and talk to a partner's top manager and feel comfortable with them.'
The personal relationship between the local partner's management and the North American company's top management team was crucial to the assessment of compatibility. 'Comfort with a partner is difficult to quantify ... it is irrational,' Eric explained, 'We try to develop a flavor for the people, the whole team, not just the top manager.' Eric, the CEO of Namtelco's international subsidiary, elaborated his involvement in assessing one local partner's fit
As our relationship developed in [a Latin American country] I decided that I better go down there and see what was going on .. . to assess the family who we were planning on doing business with. To do this, many of our well-known expatriates were contacted. We lunched with them, we talked about this family with them, we were able to obtain a fairly honest assessment of them ... we discovered that they were tough negotiators but men of their word.
Explaining his decision to go ahead and negotiate this partnership, he said 'I felt this partner had staying capacity.. , we will be able to adjust mutually.. . I have a personal chemistry with this family.'
The local firm also has to be acceptable to Namtelco's corporate board. A good partner choice was one that had 'a stable track record, chemistry with our top executives and middle management, and could be confidently introduced to our upper management,' said John. 'If we have selected the right partner,' Kathleen explained, "they have an excellent reputation and prestige in that country or region ... reputation refers to ethics, financial responsibility. These are critical features that our board would expect in a partner.' The board of directors had the right to veto a partner. As David summarized:
You have to realize that the board has a newspaper mindset . . . Because some of them are not very international they have to be sold on a deal. Apart from the merits of the deal and the financial aspects, before they allocate their money, they want to know: who we are dealing with, who are our partners, and why we selected them. The board is very jealous of their associations. They want quality partners. Sometimes, we have brought in an investment banker, after the deal is essentially agreed upon, to legitimize the overall partner and project to the board.
Outcomes and discussion Resolving this third dilemma highlighted the issue of partner compatibility and values fit between Namtelco
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and the selected local firm. A negative outcome from this dilemma was when Namtelco's international CEO or Board did not approve the project and/or partner, and no joint venture developed with a local firm. Another outcome was when a partner was not found, but the telecom project was still of interest to Namtelco. In that case, the firm recommenced the process of meeting and assessing new local firms. A positive outcome of this dilemma was that, many times, a compatible local firm was approved. Then managers had to clear the final hurdle of negotiating the details of the project.
Dilemma 4: Detailing the Project
Once a suitable partner was agreed upon, the details of the telecommunications service project were usually negotiated by other international managers than those involved in the early hunting expeditions. As the telecommunications opportunity began to take shape and a business plan for the project was undertaken, a shareholder agreement put into writing many of the negotiated details of the project. 'Many of our local partners laugh at our 32-page agreements, but we see shareholder agreements as insurance policies,' Robert explained, 'You must have them. They do not help, however, if the fundamental business plan will not work.'
The agreement includes technical specifications, the exact responsibilities of each partner in the proposed venture, financial issues, dissolution proceedings, and conflict resolution clauses. As David explained: 'We, with our corporate lawyers, spent an incredible amount of time hammering out our agreement for this deal. The local partners found that it was entirely too legalistic, they wanted the deal done on a handshake.' The importance of a shareholder's agreement is evident, however, when a bid is won. Eric stated, 'If your bid wins, you have a shareholder agreement, so on Day One you are ready to begin executing. Every partner knows what they are in charge of implementing.'
During the negotiations, managers from the North American company also assessed the local firm's objectives and level of commitment to the project. Sometimes these fall short. One manager described a local firm that appeared organizationally and culturally compatible, but whose interest in and objectives for the joint telecom service activities were considered divergent from theirs. John compared it to a dating game. 'You think you are compatible, but then you find that you are dreaming different dreams, you discover your goals are different.' To uncover the partner's objectives, according to John, it is necessary 'to listen more to what the partner's intentions are, and talk less about what you want in a venture.'
'The relationship constantly has to be nurtured even if the project is stalled,' Sam explained. 'We need to continue to talk with a local partner. It can be a lonely feeling if the partner is left by himself. New courtiers
may come calling, and you could lose the effort you have put in. You need to be on your best behavior to maintain partner relationships.'
When Deals Come Unstuck
Conflict can emerge between partners when the details of a project are discussed. In negotiating an international project in a developing country, Namtelco managers were very concerned about maintaining control. According to Robert, 'we wanted the ability to implement the venture and make it economically viable ... to be in a position to provide mutual consent on planning, investing, personnel decisions.' The issues of ownership and operational control were discussed at length with local partners. 'We are interested in deals where we maintain control or have a strong say in management,' Eric stated, 'We are not interested in small stakes and high risks.'
Another point of contention among partners was price. 'There is always high conflict potential on the price to bid for a deal or at which price to buy into a firm, but it has to be a compromise,' Eric explained. 'In many deals, you have to bid [even though] you have had only a preliminary look at the books, so you don't really know exactly what you are bidding on ... We wanted to leave the price flexible until the last minute, whereas our partners had to go to their board with a fixed price, not a range.'
Often the partners continued to rework the specifics of the telecom project as it evolved. 'The real flexibility of the partner becomes evident in hammering out the details,' according to Harold. John explained: 'All deals fall apart, you have to rework them many times, maybe even six times, we have bright guys on the ground ... we bring out the "Krazy Glue" and fix the agreement ... You can't get discouraged.' In one case, the company had already arranged the financing and ownership structure, but the project and partner relationship fell apart because they discovered that their partners were not dealing in good faith, so Namtelco walked away, recounted John. Most of the time, however, managers from both companies were able to agree on the critical aspects of the telecom activities.
Outcomes and discussion Resolving this dilemma emphasized the commitment of the local partner to the telecommunications project and the ability to gain closure on the details of the project without inordinate conflict. In some developing countries, Namtelco did not succeed in its partnering efforts. Several of their bids for a telecommunications license were not selected. John explained what they do when that happens: 'We meet as a group to talk about why we lost the bid because we usually spent millions on the process ... we want to know if it was our price, our partner selection, or what caused our bid not to win.' In another project where the local partnering process did culminate into a successful venture, Namtelco's joint
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Table 1 Summary of Local Partnering Processes in Developing Countries
Purpose and Activities
To determine the economic feasibility of a country and its telecom opportunity and to begin to build a network of contacts for potential partnering.
Activities include:
• "Hunting expeditions" to investigate country, telecom opportunities and potential partners
• Discover potential partners by chance and "being on the ground"
• Use of bandits for introductions and information, evolving network of contacts
Dilemmas
Finding Local Firms
Determining Operational Fit
Assessing Compatibility
Detailing the Project
To determine what some local firms offer operational!y to the Namtelco.
• Detemune which local companies are available and not already allied
• Meeting with and investigation of previously identified local fu-ms.
• Seek information on somc fh-m's fmancials, country knowledge, government connections, telecom skills.
• Namtelco sells itself and skills/linances to potential partners
To determine if the two companies are compatible to the extent that they will be able to work together over time without destructive conflict.
• Meetings between top management of two firms.
• Spend time with partners, gain a feel for values.
• Talk extensively with expatriates, embassy and govenunent officials to determine fu-m reputation
• Understand local firm's objectives for and commitment toward the evolvin[ telecom project.
To work out details of a specific telecom project in a developing country with a local partner.
• Negotiate details of project: price, specific roles, technical specifications of the project, ownership, control
• Lawyers and finance managers are on the ground putting together a shareholder's agreement.
Partner Selection Criteria Emphasized • Past associations with
any company in developing country of interest, use previous corporation linkages.
• lnterconnectedness of one potential contact/firrn with powerful family network of companies.
• Operational and financial resources
• Knowledge of local market and government mterconnectedness.
• Compatibility of top managers from two companies
• Compatible corporate ethics/values.
• Commitment and objectives of joint venture are clear.
• Ability to work out project details, especially price and responsibilities, without inordinate conflict
Outcome of Dilemma
• International top management decides to continue its investigation of this developing country based on potential of country, telecom opportunity, and/or partner potential.
• OR
• International top management decides.So put further investigation on hold because of negative telecom opportunity or poor partner prospects.
• A partner is identified and joint pursuit of telecom venture.
• OR
Telecom project is no longer of interest and/or potential partners wath operational fit are not found.
• Partners decide to proceed together on a telecom project
• OR Local partner rejected, begin selection process again or abandon telecom project in this country
• OR Abandon search because no imminent telecom deals evident or no viable partners.
• Marriage takes place because developing country government approves telecom bid/project
• OR Deal falls apart because of conflict or bad faith
• OR Bid is not accepted but local partner connection and comrmtment remains
• OR Bid is accepted but implementation is blocked by 8ovemment.
venture won the bid and then a losing consortium, a rival family, sued the government, claiming the project was unfairly awarded. 'This project is still in limbo, but we keep in contact with our valued partner there, hoping this situation will change,' said John. David put their many failed and aborted efforts in developing country ventures into perspective: 'If you're going to take a run at things, you are going to make mistakes and have some losses. If you aren't taking a run at things, you are making a mistake because this industry is globalizing and you must start developing a presence.' By 1994, Namtelco's international subsidiary had successfully navigated the dilemmas in four developing countries,
where they were involved in four successful and ongoing joint ventures.
Conclusions
This study addressed how managers in one firm found local partners in developing countries during the period 1989-94 by resolving the four dilemmas they encoun- tered. Finding potential local partners, determining operational fit, assessing compatibility, and detailing the project placed in relief various selection criteria
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before an active joint venture could be established. A summary table for each dilemma is provided in Table 1.
As Namtelco managers pursued each new opportunity in a new developing country, the international managers became more knowledgeable about local partner selec- tion. The speed with which they moved through the dilemmas increased over time, enabling the firm to increase its international experience and prominence. By the end of 1994, this North American telecom- munications firm had successfully developed several partnerships and significant telecom projects with local firms in four developing countries.
As uncertainty and complexity intensify in the global arena, it is increasingly important for scholars and managers to understand how to select partners and to build lasting, successful relationships in developing countries. This representation of local partnering processes requires more research before a generalizable model of international partner selection can be identified. It, however, does provide a framework which should prepare North American and European managers who are faced with selecting local partners for international expansion, especially in industries that are deregulating. In developing countries where governments are opening up parts of their infrastructure of foreign ownership and operation, selection of local partners by firms from North America and Europe will continue to be an important factor in the government's award process.
Managers may recognize their own dilemmas in the ones identified here. The criteria used by this company in reconciling its dilemmas may provide a focus for them during their own partner selection process. Similarly, awareness of these dilemmas may help managers move more rapidly through early partner selection in developing countries.
Forming partnerships with local firms for international joint ventures in developing countries is anything but a rational exercise, it is more like finding a mate with whom to spend your life - a personal, relationship- building activity. Other researchers may find it valuable to examine emerging process models from the courtship literature. For example, the interpersonal relations model (Care and Lloyd, 1992) recognizes that there are different paths to mate selection depending on contextual factors such as societal, dyadic, and individual characteristics. Transposed onto local firm partnering processes, future research should allow for different paths to successful partnering, based on contextual factors such as where partners are located, the type of industry, and the degree of government involvement in the international expansion opportunity.
Acknowledgment The authors acknowledge helpful comments from Deborah Dougherty and Richard Wright. This research was funded by a McGill University Social Science Research Grant.
Note Namtelco's partnering efforts in developing countries were significantly different from their partnering efforts in developed countries; their expansion into developed countries was aided by a deep awareness of and, in many cases, a previous relationship with the major telecommunications players in the developed markets. The sense of uncertainty about partnering, according to the many managers interviewed, was much lower in European markets (where the key telecommunications players were known) as compared to Namtelco's efforts in developing countries. Because of this difference, we focused exclusively on developing country partnerships.
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European Management JournalVol 15 No 2 April 1997 1 8 1
A CASE STUDY OF LOCAL PARTNERING PROCESSES IN DEVELOPING COUNTRIES
ANNE SMITH, Faculty of Management, McGill University, I00I Sherbrooke Street IV., Montreal PQ H3A IGS, Canada. E-mail: smith@management. mcgill.ca
Anne Smith is Assistant Professor of Policy in the Faculty of Management at McGill University. Her
current research interests include organizational transformation of firms in deregulating industries and international expansion processes. A recent publication is 'Garbage Cans and Hypercompetition: Creating Flexibility to Manage Advancing Hypercompetition in the U.S. Telecommunications Service Industry', Organization Science, September, 1996.
MARIE-CLAUDE RENEY, University of Quebec at Montreal, 315 St. Catherine Est, CP 6192 Succ. A, Montreal PQ H3C 4R2, Canada
Marie-Claude Reney is a doctoral student of strategy in Montreal's Joint Program in Business Administration, affiliated with the University
of Quebec at Montreal. She recently assisted on a research project at INSEAD, Fontainebleau, France on the management of networks of international partnerships. Her professional experience includes consulting in marketing of financial services and sales training. Her current research interests include partnership formation, cooperative work, and coordination of management teams in newly allied firms.
182 European Management JournalVo115 No 2 April 1997
