Collaborative Arrangements With a Foreign Partner

Subject: Case Studies
Pages: 2
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Differences in the Attention of Business Partners to Collaboration

Foreign and domestic partners may have different attitudes towards the importance of a particular collaborative business project. It may be due to a different economic or cultural environment. As a result, the active partner can accuse the passive partner of not being interested in collaboration. A passive partner may blame an active partner for hasty and inept decision-making. It can affect the division of profits between partners and further possible business projects.

Different Understanding of Objectives

When drawing up a collaborative contract, business partners want to achieve common goals. However, the understanding of these goals and the goals themselves can change over time. It may be influenced by many different factors, primarily cultural and economic ones. Such misunderstanding may lead to a change or even dissolution of the existing collaboration agreement, which negatively affects both companies’ financial position and future profits.

Differing Levels of Contribution

The contribution of both companies to the business process in the course of a collaborative agreement may differ both at different stages and in general. It is especially true if one of the companies is from a developed country and another from a developing one. In the future, this may lead to a revision of the previously drafted terms of collaborative agreements, especially regarding contract clauses on the division of profits.

Control Issues

In the process of creating a collaborative agreement, the question often arises of who will be the leader of the collaboration. Many factors influence it, such as the company’s experience, knowledge of the foreign cultural context, and the financial capabilities of both partners. Disagreements over the control of business collaborations may lead to the dissolution of an agreement or unfavorable conditions for one of the partners.