FACTORS IN CHOOSING A BLACK ECONOMIC PARTNER

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.