Thank you Ma'am. Yes I am looking at/trying to look at EQ.

Why I felt this point needed some attention was because; Since today, most joint ventures are not only formed for resource access or legislative reasons but also are formed in uncertain environments (may be innumerable reasons, strategic behaviors, reduce transaction cost,, etc.). Where, it is relatively difficult to ex-ante predict the outcomes.

So there are studies which have looked at how detailed the contracts are written and how much flexibility is offered to the JV and Parent firms. More the trust between the parents less stringent is the contract; However it may also be impossible to predict all the outcomes of the JV/events; and therefore it may not always be an indicator of trust.

What I am positing is that the most successful joint ventures are ones in which not only there is a high level of trust but also a lot of commitment. If there is too much commitment ans no trust between the parents, the JV might be acquired by the more comitted parent. Or if there is a lot of trust but no commitment, the JV will just survive or be ambivalent and not grow.

On a lighter note; its just like how the comic hero superman puts it "The leap of faith comes first, the trust part comes later"

So what I wish to put forth is that parent firms who come together to form a JV must have that belief or faith (just as you put it) and commit to actions events that lead to the formation of trust. Often decisions may be takes which may not initially make sense. But if worked on between parents it might turn out to be a wise decision. So do parent firms and the JV "back" each other up. Also at times of crisis when one of the parent firms is unable to commit to the JV is it that the other parent takes a leading role. Just like two working parents who raise their child; if one parent is unable to take care of the kid, the other one takes over.

I was just looking for some insights/interesting leads...

Thanks !!

The rationality of decision-making should be related to the objectives targeted by the decision. If decision made upon experience is not coherent with objectives, it can't be considered as rational.

The debate between H. Simon and H. Mintzberg about Rationality an intuition is very interesting and could help you to better define and identify rational and non rational decision.

Joint ventures are the result of strategic decisions taken after systematic analysis of both the parent firms strength and weaknesses in the internal environment, as well as opportunities and threats in the external business environment. Joint ventures built on  mutual trust, ethics, commitment to shared values and objective are likely to be successful. Rest will fade away. Rational and logical thinking are the basic foundation of arriving at strategic decisions. There could be sometimes experiential as well as intuitive thoughts prevailing on the analysis but these are certainly not non rational.

Going back over many years, when I learnt about food cycles, I recall "a pig supporting chick and a chick supporting fish' (on their respective refuse and feeds), paradigm may serve being good on heart as well as on belly for some ( the three actors there, and the fouth. that feeds this pig). But a joint venture can only be strategically poised to fulfill the objectives, based over systematic analysis, commitment, mutual trust and shared values. Such a venture is however not (to be) based upon irrational thinking, as no successes may be made there in.

Author Goldrat said  The purpose of all activities is to make money.

Unless one can have a have a Heart to hold on. In that case even the Belly can be put on hold :- )

In general, rational decisions lead to success, especially in stable and predictable environment. But many success stories show that some leaders make successful decisions in specific conditions that seem irrational for others. This type of decision is made upon intuition, experience and the capacity to have a vision or a strategic intent.

Hence, success isn't, constantly, related to rational decision.

Chaos theory, the coexistence of order and disorder in organizations, mark the "end" of rationality domination.

In my exemplar I talked of "decision made  coherent with objectives, so they will be considered as rational" (as Mahmoud said) . I have no reason to rebut Irrational decisions are not taken.. Can we apply 80/20 or 95/5 rules here? For rational / Irrational decisions. Conscientiously applied - rational decisions lead to success, especially in stable and predictable environment. Akshay's hypothesis is "Do Irrational decisions lead to success?"

For a good Hypothesis the characteristic is "I refute the argument".

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Mahmoud maintains  irrational decisions are maintained by "intuition, experience and the capacity to have a vision or a strategic intent". In my views Intuition is well founded on experience + prediction.

.See how Intuition is defined in various Dictionaries:

a natural ability or power that makes it possible to know something without any proof or evidence - Merriam-Webster

The faculty of knowing or understanding something without reasoning or proof. -Free Dictionary

direct perception of truth, fact, etc., independent of any reasoning process; immediate apprehension.-  Dictionary.com

In these three the gradual change from Rationality to Irrationality is observed.....;-)

Thank you all for the inputs; just a minor clarification. I might have made a mistake in making my point; I do not wish to put forth the argument that irrational actions/decision lead/s to success. What I wanted to put forth was that a blend of rational and non rational (non rational=/= irrational) decisions lead to a successful JV or any organization for that matter.

What happens is in today's complex business scenario, it is highly improbable to make decisions  based on complete information. Either the context may change, or the actors in the alliance or any such factor may chip in , which could not have been accounted for earlier ex ante/while inking  the deal.

So, sometimes firms may need to trust the other partner/JV Manager when certain decisions need to be taken which may not necessarily make complete sense then (for ex. the JV Manager when he sees that certain objectives of the parents may not be met under the current context; I had interviewed one JV Manager who got into the water business,  when the actual objective was something else of the parents) What I wish to put forth is that the Manager in order to sustain the company then ventured into a business other than the intended objective. Was this decision in line with the penultimate objective of the JV? No ! but it was taken so that the JV could sustain itself, when the parent firms were unable to contribute further capital.I hope I am making some sense or bringing in some clarity here. What may seem not coherent at first may actually contribute to the final goal.

So all the decisions involve a series of rational and non rational choices.. and this amalgamated with the constructs of trust and commitment  may lead to a successful JV.

if one of the parents is overtly commited to the JV in a low trust environment it may result in an acquisition by the commited partner. // There are the other hypothesis.

Thank you for your ideas !!

Yes, That is what I said, and intended.

In that 80 /20 imbroglio rational / Irrational decisions

if there is rationality in irrationality ( mixed when you say), the probability of success becomes 80 + .8 x 20   that is 96.

Thus it (success rate) surpasses a better model of 95/5

The three points below discuss the question, 'Is non rational thinking in strategy placing belly and heart over head?'

1. Some research indicates that we think with other parts of our body that the brain, and that these parts communicate with our brain. There is a nice allusion to such research on http://www.bbc.co.uk/news/health-18779997

2. Strategy, as it is widely understood, is extremely important to endeavours such as war and sport. In these endeavours, one objective: to win, triumphs over all others.  Accordingly, much thinking in strategy suffers from two interrelated problems: a)  The observer's concept of rationality is removed from the life context of the person who is observed, and b) Observers often think about rational behaviour in terms of a single objective.

Strategy is equally important to other endeavours, but it is more difficult to research or discuss strategy when there is more than one objective, or when the objectives are not clear to the observer or the person observed.

The researcher might wonder why people are apparently behaving irrationally, thinking that the thought processes of the persons observed do not indicate that they are maximising 'A' in their lives. However, the persons observed may not be particularly interested in maximising 'A', at all. Perhaps some of them want to prioritise 'B' and 'C' instead. Perhaps some of them have not given a lot of conscious thought to the objectives 'A', 'B' and 'C' or any others at all. Neither have they consciously considered how to think and act strategically to achieve those objectives.  Nevertheless their belly and heart as well as their conscious and sub-conscious thought processes of all those persons contribute to their thinking and behaviour.

3. Perhaps we have come across situations, in books, movies or real life, or even in our own lives, in which we can see that someone is making the wrong choices. Sometimes this is because they are listening too much to the rational parts of their brain, or trying too hard to maximise a single objective (e.g., to take a job that pays well, or to find a rich husband) to the exclusion of other considerations. The rational part of the brain might come around to the same conclusion as the belly and heart, eventually. 'Thought' processes are also influenced by a range of factors, which include social ones: 'How much does my social group value money relative to other considerations?'

So in looking at the question, 'Is non rational thinking in strategy placing belly and heart over head?' we might say:

Taking belly and heart into consideration is likely to save us from some very, very bad mistakes. On the other hand, we don't want necessarily want to idealise the decision-making of the belly and heart such that we place it over the brain, either. Presumably we have (apparently) rational and (apparently) non-rational parts in our brains for very good reasons.

Perhaps, to make balanced decisions, it is most 'rational' to pay attention to all the different ways of 'thinking' that are available to us.

The idea of blend of rational and nonrational decision is more realistic and natural. We should not forget that the source of decision: the brain is composed from two hemispheres, the left hemisphere generating rational decision and the right hemisphere responsible of nonrational decision. The balance of the two hemispheres is necessary to success of the decision maker. By analogy, the same reasoning could be applied to social organizations.

Dear Mr. Akshai:

                           Your question is quite interesting. A good reading concerning the different approaches to strategy that exist, can be find in Mintzberg et al "Strategy Safari". The author organizes there the different schools he finds about strategy. You will find how for some schools strategy is a matter of thinking while for others it´s a more intuitive thing.

                           A text book where you can find a similar but smaller discussion is in Johnson, Scholes and Whittington, "Exploring corporate strategy, text and cases", there are several versions, mine is in spanish, it is from a 2007 edition. The authors speak there about strategy "prisms",  meaning there are different ways to look at the discipline.

Kind regards

Gustavo Concari

I Agree Dr. Gustavo... I have the book; it is more inline with the configuration school.

Well, under my criterion, a rational decision making has to be based on some analysis, some "pro-against" paper at minimum, even if it contains only qualitative elements that could be avalueted from the previous experience of the decisor's agent. For me, without some sheduled analysis, the decision process becames a game, not a business decision process.

Manuel Amado

Extremely interesting question. Lately I come across quite often on results from brain research, which suggests that decisions are taken unconsciously or preconsciously. The major reference is a new version of the Libet experiment by John-Dylan Haynes from Berlin's Bernstein Center for Computational Neuroscience. He showed that the brain has been acting up to 10 seconds prior to a conscious decision.

Gerhard Roth, executive director at the Institute for Brain Research at the University of Bremen, has tried to explain what this means as follows:

"Everyone lives in his highly individual world of affects, emotions and rational explanations and thus his action purposes. Such purposes we do not follow from logical considerations, but because of unconscious or conscious motives that often stretch well into our childhood. These motifs usually bend rational instance in us until it suits them - and not vice versa."

Perhaps it is interesting to take into account this approach.

Thanks Dieter & Manuel ! Interesting thoughts..

I would link the topic on two main concepts: strategy = a THEORY to get competitive advantage (resource-based vision), where theory refers to ideas; creativity in entrepreneurship, which is bound to the concept of catching rather than creating opportunities (see Barney, alvarez, etc.).

I agree that the Mintzberg et al.text might be a useful resource in this regard. However, I find Dieter Bickenbach's input to be very fascinating. I am definitely going to read up on this. Dieter, can you recommend an article or a site? Thanks!

Ruth

What I think you are asking is how do you help people or corporate managers to move from a state of irrational selfishness to a state of rational cooperation.   I like to use the term enlightened self-interest to describe the interactions of people and businesses.  No one will consciously do anything unless they either view it as either beneficial or at best non-threatening.  

I have found after working for many years in various technological industries it is the person to person communication that helps to remove the irrational decisions.  Nothing in my experience works better at helping people reach the state of enlightened self interest than sitting down and having a cup of coffee.  

@ Manuel  saying " a rational decision making has to be based on some analysis, some "pro-against" paper at minimum, even if it contains only qualitative elements that could be avalueted from the previous experience of the decisor's agent." you are right about quantification, @ Valentina concurs.

Thank you James for your cultural richness to help. I am fond of Kurt Levin's force field analysis, which can be applied to see what is facilitated by heart, and what by belly. I have used quantification for its transformation from being a mere qualitative tool. One it becomes Objective, the decision making is easier.

Priyavart I appreciate the thought. 

Removing emotion from the thought process should be the ideal way of coming to the correct decision for the situation.