Modes of acquiring host-country experience and performance of international joint ventures in Japan

Abstract

Drawing upon organizational learning literature, we examine how different modes of acquiring host-country experience (HCE) affect international joint ventures (IJV) performance. Our study suggests that HCE improves IJV performance by reducing the liabilities of foreignness and cross-national collaboration confronting foreign firms. However, due to the difficulty of learning from experience, HCE may not always benefit IJV performance and may even harm it, depending on how it was accumulated. Our analysis of IJV survival and growth using data on IJVs in Japan between 1985 and 2000 supports this argument. Our findings have practical implications for leveraging HCE and suggest that the performance benefits of HCE should not be overstated.