|The purpose of this thesis is to understand the variations on the performance of an oil-sector International Joint Venture (IJV) when facing changes in political and legal contexts that affected its equity structure. The scope of this study covers Sincor/Petrocedeño, the Venezuelanbased petroleum extraction-and-upgrading-operations joint venture which was established in 1997 with a 47% equity stake for French-based Total, 38% for Venezuelan-based PDVSA and 15% for Norwegian-based Statoil. The study aims to understand the changes that took place after the 2007 Mixed Companies Law enacted by the Venezuelan Government that required PDVSAmajority equity stakes in any Oil-sector joint venture operating in the country.
The objective is to identify how differences in control and collaboration mechanisms and interfirm diversity dimensions influenced performance changes in the IJV business operation. The specific objectives include i) understanding what were the changes in Sincor/Petrocedeño´s financial, operational and organizational performance after the 2007 Mixed Companies Law was implemented; ii) identifying the role that trust and control mechanisms between partners had in building confidence within the IJV and its influence on performance; iii) assessing the differences in inter-firm diversity dimensions and their effect on confidence building and performance of the IJV.
The results show that the lack of trust and the unbalanced distribution of decision-making power between parent companies fostered an absence of confidence that created an opportunistic behavior, thus lowering IJV performance. Furthermore, the differences in corporate culture, strategic direction and management practices among partners produced such a gap that created distrust, lack of coordination and, hence, lower performance. The worsening conditions occurred at financial, operational and organizational levels and were further influenced by an unstable political and legal context in Venezuela.