Significance of joint venture enterprises for the development of the construction industry of Sri Lanka

Abstract

Developing economies rely on technology acquisition and innovation to build capacity, yet Sri Lanka's construction industry lags due to an over-reliance on traditional procurement over equity-based Joint Venture Enterprises (JVEs). While firms use contractual joint ventures to execute large-scale infrastructure projects, the unique benefits of JVEs remain underutilized. This study explores the drivers, benefits, operational barriers, and selection criteria for implementing efficient JVEs in Sri Lanka. Using a mixed-method approach, the research contextualized international literature through three semi-structured expert interviews, followed by a quantitative survey of 30 industry professionals. Qualitative data were evaluated via Content Analysis, while quantitative data were ranked using the Relative Importance Index (RII). The analysis reveals that safeguarding investments (RII = 0.7633) is the primary motivator for choosing a JVE over a contractual alternative. The most significant industry benefits identified are making complex projects feasible (RII = 0.8333) and facilitating technology transfer (RII = 0.8133). However, the model faces severe headwinds: an unstable economic situation (RII = 0.807) and a lack of specific foreign investment laws (RII = 0.767) emerged as the top operational barriers. The study concludes that JVEs are highly effective instruments for expanding local capacity in the construction sector. To unlock this potential and encourage equity-based joint venture participation, the study recommends targeted legislative adjustments to protect and incentivize foreign and domestic investors.