Improving Governance in Joint Ventures

BCG research finds that one in three failed joint ventures can trace problems partly to ineffective boards, making poor JV governance the third most common cause of JV failure. JV boards face structural disadvantages absent from public, PE-backed, or family-owned company boards: directors often carry dual loyalties to parent companies, lack financial incentives tied to JV performance, and have little board experience, while operating with minimal support structures. BCG identifies three governance failure modes—unclear decision rights, management paralysis, and partner distrust—and recommends JV boards borrow specific practices from public company boards (strategic narrative discipline, operating cadence, CEO succession planning), PE boards (capability-based director selection, high-conviction strategy, rapid cadence adjustment), and family-owned boards. Practical remedies focus on governing parent-company service agreements, clarifying seconded executives' reporting lines, and maintaining ongoing alignment on strategic objectives across owners.