Probing the unobtrusive link: Dominant logic and the design of joint ventures at General Electric

Prahalad and Bettis (1986) have proposed that the successful management of highly diversified firms can be attributed to the concept of a corporate "d ominant logic" that guides all of its business units. We argue that dominan t logic addresses the problem of balancing the needs of business units agai nst those of the corporation as a whole. We also suggest that the presence of a clear and consistent dominant logic must lead to a high degree of cons istency in the strategic moves that are undertaken by each of the business units within the diversified firm. Based on a study of the joint ventures i nitiated by General Electric between 1984 and 1993, we show that the design of these ventures follows a pattern that is consistent with the presence a nd influence of dominant logic. Finally, we demonstrate that the early fail ure of joint ventures cart generally be linked to a shift away from this do minant logic. Copyright (C) 2000 John Wiley & Sons, Ltd.