Sino‐foreign joint ventures: from exogamy to endogamy

Abstract

PurposeThis research aims to demonstrate that most of the current Sino‐foreign joint ventures are exogamic partnerships and to analyze the resources pooled by allies in Sino‐foreign joint ventures, the objectives pursued by each ally and how this mix has evolved since the first days of the open door policy.Design/methodology/approachThe paper is based on an extensive literature review and data collection into 67 Sino‐foreign joint ventures. Data were collected into joint ventures employing more than 100 employees and primarily based around Shanghai. A semi‐structured questionnaire was administered mostly with Chinese managers. A set of 21 different resources and 15 different objectives were examined.FindingsThree main conclusions emerge: partners of Sino‐foreign joint ventures contribute with differentiated sets of idiosyncratic and non‐substitutable resources that are distinctively under the control of each partner with Chinese bringing locally rooted resources and country‐specific knowledge and foreigners bringing technology, managerial abilities, brand image and financial resources, there is a symmetrical relationship between the objectives of one partner and the resources brought into the alliance by the other with each one trying to gain access to what the other pools into the joint venture, and finally, the more recent the partnership, the less the partners contribute with their idiosyncratic resources.Research limitations/implicationsThe profile of Chinese partners might favor a Shanghainese point of view. More data from other areas such as Beijing and Guangzhou would be needed to test in future research whether cultural differences between different Chinese provinces might create some discrepancies relative to the issues raised. In the same vein, the limited number of foreign managers who answered the questionnaire did not allow for a comparison to be made with Chinese managers. A systematic comparison would offer some interesting areas for future research.Practical implicationsThis paper suggests that Sino‐foreign joint ventures will increasingly be transformed into endogamic partnerships in the future. Because of the combination of differentiated resources in Sino‐foreign joint ventures, each partner learns from its counterpart and tends to fill the knowledge gap. Once the learning process is completed, partners' profiles tend to be closer. Partners become able to accumulate similar resources. This produces size or scale advantages – which is precisely the benefit of endogamies.Originality/valueThis is one of the first empirical research studies to use the endogamy/exogamy dichotomy in the field of business. These two archetypes offer new perspectives for the study of joint ventures, and especially for the analysis of Sino‐foreign joint ventures. This research is also probably amongst the first studies to analyze these issues using data collected primarily from Chinese managers. And technology is not treated globally but is analyzed along different lines.