Firm performance, knowledge transfer and international joint ventures

Abstract

Management and protection of proprietary intangible assets, such as technology and management skills, are important for firms considering international expansion via joint ventures. Joint venture partners have incentives to appropriate intangible property. Also, many governments have instituted policies to help domestic firms maximise technology spillovers. Some require foreign firms interested in selling in domestic markets to enter into arrangements that ensure the flow of technology from the foreign firms. This gives the host country partners an advantage over their foreign counterparts when it comes to sharing intangible assets. It is often asserted that these sorts of host country advantages contribute to better economic growth for that country and the domestic firms involved in the international joint ventures. However, there is little empirical evidence on this. We present empirical evidence that transfer of intangible assets from foreign to host country partners contributes to the performance of the host country partner firms.