Foreign ownership in joint ventures under knowledge leakage risks: The influence of industrial munificence and dynamism

Abstract

This research investigates the role of industrial munificence and dynamism in foreign ownership of international joint ventures (IJVs) in emerging markets. Based on an investigation of 50,069 observations of IJVs in China, I find that foreign ownership in IJVs increases with industrial munificence and decreases with industrial dynamism in the local market. Moreover, while foreign firms with higher intangible asset intensity tend to hold higher foreign ownership in IJVs, industrial munificence positively moderates this relationship due to its role in enhancing the knowledge leakage risks. Furthermore, the roles of intangible asset intensity, munificence and dynamism on foreign ownership are more observable in industries with medium technology intensities and more liberalized FDI policies. The moderating roles of munificence and dynamism are not significant in IJVs with conventional local partners and foreign partners with Chinese cultural background.