Autonomy and technological capability in joint ventures in China

Abstract

China's economic reform – started in 1979 under the new leadership of Deng Xiaoping – began a gradual movement from a centrally planned to a market economy. In the ensuing quarter century, the private business sector, including small businesses, township enterprises, and foreign-owned firms, has become the driving force behind China's economic renaissance. Many of these local businesses have become highly innovative. Taking the perspectives of competence-based view of the firm and of organisational learning, this study examines the organisational mechanisms of the technological capability building process by studying the joint venture (JV) autonomy between the Chinese joint venture and the JV-partner's (parent company). We found the correlation between JV autonomy and technological capability accumulation is negative and significant. However, the level of technological innovation capability is positively associated with the degree of outcome measurability.