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  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e i

    Towards a model for sustainable international stock-broking

    joint ventures

    EMBA DISSERTATION

    Lenny Dhliwayo

    07/03/2011

  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e ii

    UNIVERSITY OF CAPE TOWN

    GRADUATE SCHOOL OF BUSINESS

    DATE: 07th March 2011

    DECLARATION

    1 I know that plagiarism is wrong. Plagiarism is to use anothers work and pretend that it

    is your own.

    2 I have used a recognised convention for citation and referencing. Each significant

    contribution and quotation from the works of other people has been attributed, cited

    and referenced.

    3 I certify that this submission is all my own work.

    4 I have not allowed and will not allow anyone to copy this essay with the intention of

    passing it off as his or her own work.

    Signature: Date: 7 March 2011

  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e iii

    Abstract

    According to Peter Drucker, business once grew by one of the following ways: grassroots up, or by acquisition and today, businesses grow through alliances all kinds of dangerous alliances, joint- ventures, and customer partnering, which by the way very few people understand (Peter Drucker).

    International joint ventures are increasing in popularity globally. An international joint

    venture is established by the teaming up of an international partner with a local one to

    create a joint venture business (JV).

    International stock-broking joint ventures (IJVs) are also increasingly becoming a popular

    business model globally as well as in South Africa. In most cases IJVs are established by

    global investment banks that team up with local banks or other partners to create a JV.

    The increase in popularity of these international JVs is driven by a variety of reasons

    amongst others, the need to quickly access new foreign markets, products, and the need

    to share the business risk associated with such operating such businesses. Despite their

    increasing popularity, international JVs are regarded as risky and unsustainable due to

    their high failure rates which are estimated between 50-70% globally as indicated in the

    Accenture report on international JVs of 2009.

    In South Africa, IJVs are gaining popularity as evidenced by the establishment of six IJVs

    in the last ten years. Four out of the six IJVs have since been terminated and most of them

    within two years of their establishment. Their longevity is the concern for this study.

    The study undertook to understand the underlying causal mechanisms that impact the

    behaviour of the concern through a case study approach based on ABC, an IJVs

    established in 2006. Data from another IJVs also established in the same year was used

    extensively used to compare and triangulate the findings. These are not the real names of

    the organisations but names chosen for confidentiality reasons. The researcher was

    employed at ABC at the time of conducting this study.

    ABC lasted for four years whilst BBB is still operating. To develop a detailed understanding

    of the stakeholders and the situation, a stakeholders analysis was conducted using the

    CATWOE framework. This identified the key stakeholders and their multiple worldviews

    which were then positioned in a Rich Picture which further highlighted the situation and the

    concern.

    The study established that the longevity concerns impacted the IJVs ability to recruit and

    retain staff in the business due to the high levels of uncertainty associated with JV

    businesses. The concern led to the development of the question which was to be

  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e iv

    answered during the study based on the findings from ABC and BBB. The question was,

    What critical factors impact the longevity of international stock-broking joint ventures in

    South Africa?

    To find an answer to the question, the researcher developed an integrated research

    framework which used the grounded theory methodology as its core process. A critical

    realist perspective based on the researchers ontology and epistemology was integrated

    into the framework and was extensively used in the study.

    A wide variety of research participants as indentified by the stakeholders analysis were

    engaged and these were mostly drawn from ABC, BBB and other key industry

    stakeholders. The participants ranged from staff, management, and shareholder

    representatives for both ABC and BBB. The majority of interviews were conducted face to

    face and at times telephonic interviews were utilised especially for participants based

    overseas. E-mail surveys were used but mostly for second round interviews as well as

    when most convenient to the participants.

    During the study, five core-variables emerged being:

    The articulation of a compelling vision and objectives

    The level of cybernetic capabilities of the organisation

    The availability of enabling business resources

    The development of a sustainable competitive advantage

    The extent of business autonomy.

    The variables were analysed using an inter-relationship diagraph to establish and

    understand their systematic relationships. The articulation of a compelling vision and

    objectives variable emerged as the strongest driver whilst the extent of business autonomy

    emerged as an outcome.

    The emergent core-variables were theoretically coded and validated using two well

    established business theories, the Viable Systems Model (VSM) developed by Stafford

    Beer, and the Business Idea developed by Kess van der Heijden to establish an emergent

    theory.

    A causal loop diagram (CLD) was created using the core-variables and this was the

    answer of the research question or the emergent theory from the study. The CLD was a

    representation of the underlying causal mechanisms that were impacting the concern

  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e v

    therefore it was the answer to the research. The findings established that a lack of the five

    critical factors the core-variables identified in the study provided a plausible explanation of

    the reasons why the majority of the IJVs are terminated before reaching the end of their

    terms. It was deduced that IJVs can implement the critical factors to positively enhance the

    longevity of their businesses.

    The research process and answer were evaluated for relevance, utility, validity, and ethical

    considerations. The evaluation was conducted using the Velasquez ethics model. The

    evaluation could not establish any ethical infringements by both the research process and

    the answer.

    It can be confirmed that the study was conducted on sound research principles and thus

    the results presented are credible and can be relied upon. The emergent theory was found

    to be valuable to current, future IJVs and any other business types which seek to enhance

    their longevity and sustainability.

  • Copyright UCT

    Lenny Dhliwayo EMBA 11 P a g e vi

    CONTENTS

    1 CHAPTER 1: INTRODUCTION AND OVERVIEW ....................................................... 1

    1.8.1 Force field analysis of the factors impacting ABCs concern ................................................... 15

    1.9.1 Scope of the question ............................................................................................................... 17 1.9.2 Construction of the question ..................................................................................................... 18 1.9.3 Assumptions of the research question ..................................................................................... 18

    2 CHAPTER 2: LITERATURE REVIEW ........................................................................ 21

    3 CHAPTER 3: RESEARCH METHODOLOGY ............................................................ 39

    3.2.1 Epistemology our knowledge of what exists .......................................................................... 40 3.2.2 Ontology what exists ............................................................................................................. 42 3.2.3 Application of critical realism in the study ................................................................................. 42

    3.4.1 Stage 1 Context Setting ......................................................................................................... 45 3.4.2 Stage 2 Data generation and analysis .................................................................................. 46 3.4.3 The grounded theory process ................................................................................................... 47 3.4.4 Stage 3 Emergent theory formulation .................................................................................... 51 3.4.5 Stage 4 Theoretical Coding - finding a codin

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