Mitsubishi & Volvo: Managing Co-opetition in NedCar

In May 1991, Mitsubishi Motors Corporation and Volvo announced their joint venture NedCar to develop two small passenger car models, which would be produced on the same line but still differentiated and sold under their respective labels. This case describes the mechanisms used and difficulties faced by each firm as they tried to collaborate across much of the value chain and standardize common parts, while protecting critical proprietary knowledge within their independent domains. Rather than national differences, firm-level differences in processes, standards and terminology emerged as the main sources of difficulty in their joint effort.

This case provides an in-depth illustration of mechanisms to link two different organizations undertaking a highly interdependent joint effort spanning much of the value chain. Although the context is an international joint venture, the case also serves as a basis for discussing a wide range of cultural dimensions and communication issues that go beyond national or ethnic differences. These include differences between firms regarding assumptions about status and hierarchy among different departments and activities, values and priorities about product characteristics, and the uncodified nature of much engineering knowledge.