Potential risks to international joint ventures in developing economies: the Ghanaian construction industry experience

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.