FACTORS IN CHOOSING A BLACK ECONOMIC PARTNER
Date
2011-04-12
Authors
Gouws, Johan
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This report investigates the factors that are of importance in choosing a Black
Economic Partner to maximise the vested interest of all stakeholders involved
in the joint venture.
The research report is broad and lays the groundwork for further in-depth
research. The research reported was exploratory and explanatory. A
quantitative research methodology was chosen, consequent to the limited
number of possible respondents in a cross-section of companies in Gauteng.
The Delphi technique was used as research method. Data were gathered
through documented questionnaires using open–ended questions in Round 1
of the research, while documented questionnaires using scaling methods
were used in Round 2 of the research. In-depth interviews with experts in the
field of Black Economic Empowerment were used in the final round of the
research.
The factors involved in the choice of a Black Economic Partner include having
a clear documented reason for the joint venture and should not include “being
compliant”. It was found that companies that choose a Black Economic
Partner just to be compliant run a bigger risk of choosing the wrong partner,
resulting in the failure of the joint venture. For most companies it is a
business imperative that they go into a Black Economic Empowerment joint
venture. The most important factor when choosing a Black Economic Partner
is that the partner should have financial risk in the joint venture. This financial
risk, though, must be carefully defined, as many Black Economic Partners do
not have financial capital to invest in a joint venture, but instruments are
available to assist. Another factor of importance is the Black Economic
Partner’s influence in the business world and ability of the partner to fit in with
the company’s culture and values. This research found that it is better to
choose a Black Economic Partner that does not have many investments over
a wide spectrum of industries, as the partner must actively contribute to and
focus on one industry. This research also found that management generally
ii
is committed to Black Economic Empowerment but that managers are not
efficiently skilled to implement Black Economic Empowerment.
This research should serve as a pilot study that aims to explore new territory.
From this explorative research, more extensive research of the contributing
factors should be conducted in a cross-section more representative of the
economy of South Africa and not only Gauteng.
No research could be found that addresses the choice a company makes with
regard to a Black Economic Partner in a joint venture. The researcher hopes
that this research will make companies more sensitive in considering the
factors involved when choosing a Black Economic Partner for a joint venture.
Description
MBA - WBS
Keywords
Black economic empowerment, Black partners, Joint ventures