The role of credible commitments in joint venture management

The concept of credible commitments in alliance management in general and joint venture (JV) management in particular is under-developed. Credible commitments are a key concept in both new institutional economics (NIE) and transaction costs economics (TCE). Yet, the term is not clearly defined. Within joint ventures, credible commitments are both the cause and solution to alliance opportunism. As a solution, making and seeking credible commitments serve the purpose of safeguarding JV partnership by creating a mutual holdup situation. But on the other hand, credible commitments often appear in conjunction with relation-specific investment and become a cause of opportunism. Disputes arise in JV cooperation often because of the opportunistic exploitation of one partner's credible commitments in relation-specific assets by another. The paper builds a framework to examine the role of credible commitments in establishing and managing JVs and study possible links between the nature of JV partners' credible commitments and dispute resolution strategies.