Joint Venture Firms Research Articles

Knowledge transfer and technological upgrading of foreign affiliates in Indonesia: firm level analysis

Knowledge transfer is an essential process to generate the capacity of technological advancement for industrial development in developing countries. This paper aims to explore the role of knowledge transfer and learning process to support the improvement of technological capabilities of local suppliers. By using a sampling method of 26 multinational companies (foreign affiliates) in machinery and electrical components sector in Indonesia, several possible determinants pursuing knowledge transfer activities are analysed. The size of the sample is limited by the data collection. This study confirms findings that the possibility of knowledge transmission for local suppliers does exist, particularly for joint venture firms and those who have export activities. The foreign affiliates with research and development divisions are more likely to transfer knowledge to local firms. To explore in detail, two case studies were selected from the sample to describe how knowledge transfer activities managed among partners. It suggested that knowledge transfer as an effort of upgrading technology dependent on the learning experience between firm development and external source of knowledge. A process to formalise knowledge transfer relationships with equal benefits between sender and recipient is a key.

The Impact of Brand Transposition Strategies and Firm Type on Consumer Ratings of Brand: An Analytical Study of Cosmetic Brands

Selecting an appropriate brand transposition strategy across different language systems is crucial to a brand’s success in the multi-cultural global marketplace. Drawing upon appraisal theory and using a large data set of 3,100 real cosmetic brands and their consumer ratings in China, we analyze the effectiveness of three common brand transposition strategies across three types of firms. The results show that the brand transposition strategies differ in their effects on consumer ratings of brand, and the effects depend on the firm type (foreign, joint venture, and domestic firms). Specifically, a semantic brand transposition strategy exerts positive effects on consumer ratings of foreign brands and joint venture brands but not of domestic brands. The phonetic transposition strategy and the phonosemantic transposition strategy benefit only foreign brands, and not joint venture brands or domestic brands. To better understand brand transposition between two language systems, we also provide descriptive analyses of the transposing patterns of Chinese character usage across firm types as well as the most frequently used Chinese characters in cosmetic brand names.

Estimating inward regional FDI spillover in Vietnamese manufacturing firms: ownership structure and firm characteristics

This paper aims to investigate whether the presence of foreign direct investment (FDI) delivers positive externalities to domestic firms in the same industry and region using recent detailed panel data for 87,195 Vietnamese firms from 2010 to 2015 and an aggregate input-output matrix. The results indicate that domestic firms in Northern Vietnam are positively affected by intra-industry FDI but negatively affected by intra-region FDI. Interestingly, FDI within both the same industry and region benefits domestic firms in the Central coast region but has insignificant effects in other geographical areas. Finally, while domestically owned and, to a lesser extent, joint-venture firms suffer from the presence of FDI within the same industry, they benefit from intra-region horizontal spillover. These findings have implications for policy makers and authorities seeking to attract FDI for continued economic growth in Vietnam that also benefits domestic firms.

Institutional complementarities: The origins of experimentation in China’s plug-in electric vehicle industry

A vast literature on technology transitions within industries suggests that early phases of new technologies are marked by periods of intense experimentation, but we know little about the conditions under which these periods emerge. We apply inductive, grounded theory-building techniques to examine what prompts firms to experiment across one emerging technology platform—plug-in electric vehicles (PEVs)—in China. Triangulating annual vehicle make and model sales data from 2003 to 2016 (plus monthly data from 2010 to 2016); 112 English and Mandarin archival documents from industry, academic, and news outlets; and 51 semi-structured interviews with industry, government, and academic stakeholders, we develop four in-depth case studies. We find that in contrast to the innovation trajectories of multinational and Chinese arms of joint venture (JV) firms, independent domestic Chinese firms (those with no history of international JV partnerships) are undertaking significant experimentation across multiple levels—infrastructure, core system, subsystem, and component—of the emerging PEV technology platform. We propose the concept of “institutional complementarities” to describe how interactions among institutions—here the national JV regulation and local market support and subsidies—may have turned regional markets into protected laboratories, extending the incubation periods for independent domestic firm experimentation. While this diverse experimentation may be an important antecedent of technology transition, consolidation induced by national policy standardization or competitive pressure may be required for PEV innovations to scale beyond their early, protected regional markets.

Up, Down, and Sideways: Innovation in China and the Case of Plug-In Electric Vehicles

We present evidence that independent domestic Chinese firms — those with no historic partnerships with international joint venture firms — are undertaking a surprising diversity of innovation in China’s plug-in electric vehicle sector. Triangulating annual vehicle make and model sales data from 2003-2014, archival data from Chinese news and academic outlets, and 37 qualitative interviews across industry, government, and academic stakeholders, we apply inductive, grounded theory building techniques to help explain this diversity. Leveraging four case studies, we demonstrate the existence of at least three distinct innovation directions (“up”, “down”, and “sideways”) ranging from vehicle technology to organizational and business strategies. Our findings suggest, that while national institutions such as the joint venture system may be inadvertently discouraging innovation and diffusion of plug-in vehicle technologies from both the domestic and foreign arms of international joint venture automotive firms, regional institutions such as local protectionism may be serving as incubators for a variety of innovations within independent domestic firms in their early development stages. The size and heterogeneity of China’s domestic market may be large enough to support this variety of innovations. That said, as these domestic firms begin to grow beyond their protected regional markets, China’s institutions may need to evolve to support national standardization of policies and plug-in infrastructure.

Does firm privatisation benefit local households? The case of Vietnam

Although most countries follow a market economy, they still maintain a number of state-owned firms. In Vietnam the process of firm privatisation has been going on since the early 1990s. However, state-owned firms and joint-venture firms with public capital still account for nearly 40% of total firm output. In this article we find that the privatisation of firms can help households improve their welfare and reduce poverty, albeit by a small magnitude. The agglomeration of firms, as a result of privatisation, increases employment and wages of individuals and thus has a positive effect on per capita income, per capita expenditure and poverty reduction. In particular, the effect on per capita expenditure tends to be higher for households with male, younger and better educated heads than those with female, older and less well educated heads. We do not find any effect from state-owned firms on household welfare and poverty reduction.

Institutional influences on board composition of international joint venture firms listing on emerging stock exchanges: Evidence from Africa

The attraction of blue-chip listings in emerging stock markets is a major policy initiative common across much of the developing world. In many cases however, local blue-chip firms are the result of foreign Multinational Enterprise (MNE) firms engaging with local indigenous partners to form an international joint venture (IJV). These are unique with bilateral governance structures underscoring co-ownership between partners of residual cash flows and assets of the IJV. Using a unique and comprehensive sample of 202 IPO firms from across the emerging African region evidence of both a pronounced internal as well as external role for IJV boards was found. Social and political legitimacy concerns dominate the external role of boards in particular. Increasing proportions of boards drawn from commercial and governmental social elites are associated with IJV IPO firms in high institutional quality while lower proportions of these elites are associated with civil code law jurisdictions rather than common law. Governmental elites are associated with country-level improvements in corruption control and political stability while commercial elites are only marginally associated with improvements in political stability, regulatory quality, rule of law and democratic voice and accountability measures.

Foreign direct investment concessions and environmental levies in China

We investigate how foreign involvement in the ownership of privately held entrepreneurial firms affects pollution fees levied by national and provincial governments in China (environmental levies). Because provincial governments have considerable control over environmental policies, differences in environmental levies provide a good proxy for measuring provincial concessions made for the purpose of attracting investment, and particularly foreign direct investment (FDI). Furthermore, because we consider privately held entrepreneurial firms rather than publically listed firms, foreign involvement in ownership provides a good proxy for FDI. We find that firms with foreign ownership do indeed pay lower environmental levies, which indicates that concessions are made to attract FDI to China. However, these concessions are conditional on the level of development of the province offering them, with better developed provinces providing fewer concessions for FDI. We also find that greater concessions are made to foreign joint venture firms having a foreign ownership stake of less than or equal to 50%.

The impact of organization ownership structure on JIT implementation and production operations performance

PurposeThe purpose of this paper is to empirically explore the relationships among organization ownership structure, implementation of just‐in‐time (JIT), and production operations performance.Design/methodology/approachA theory model for explaining the relationships among ownership, manufacturing strategy and performance was constructed, and then several hypotheses were tested using statistical analysis models based on questionnaire responses from Chinese manufacturing firms.FindingsThe results show that organization ownership not only impacts the implementation of JIT and operations performance, but also impacts the relationship between JIT implementation and operations performance. Moreover, the results show that, for firms operated in China, the implementation frequency of JIT practices varies with organization ownerships; the foreign and joint venture firms (JVFs) were found to have a higher level of JIT implementation and can also achieve better performance from JIT implementation than state‐owned and private‐owned firms (POF). Also, JIT implementation was found to have a significantly positive relationship with operations performance in all types of ownership firms, with the exception of private ownership firms.Research limitations/implicationsThe research only covers manufacturing firms in China. Further research is needed to test the wide implications of this research in other countries or industries.Practical implicationsThis paper provides insights into how to improve JIT implementation performances, especially in various organization ownership structures.Originality/valueThe paper appears to be one of the first studies of relationship between ownership structure and JIT implementation in China manufacturing environment.

The impact of technology-motivated M&A and joint ventures on the value of IT and non-IT firms: a new examination

We extend Lee and Lim (Rev Quant Financ Account 27:111–123, 2006) who provide empirical evidence on the impact of mergers and acquisitions (M&As) and joint ventures on the value of information technology (IT) and non-IT firms. Using technology-motivated transactions, we examine whether there are differences in market response to the announcement of M&As and joint ventures, and we consider the long-term performance of such firms. We find the market provides no (positive) reaction to joint ventures (M&As) at the announcement. We also present new evidence suggesting the market reacts more favorably to the announcement of technology M&As relative to joint ventures for our full sample, IT sample and non-IT sample. However, our examination of these firms’ long-term performance suggests the initial reaction is not fully supported. The findings suggest improved (declining) operating performance for joint venture (M&A) firms, and evidence to conclude joint venture firms achieve superior long-term performance changes for both accrual- and cash-based measures. To explain these inconsistencies, we employ a set of control variables previously documented as determinants of the innovation ownership decision. For joint venture firms, we find that, while the market fails to consider the importance of the firms’ R&D intensity and growth prospects in its initial reaction, these are ultimately key indicators of their future performance. The evidence also suggests the market overreacts to M&A announcements because it over-weights the impact of R&D intensity on the firms’ future performance in its initial response.

Effects of enterprise technology on supply chain collaboration: analysis of China-linked supply chain

Supply chain collaboration has received increasing attention from scholars and practitioners in recent years. However, our understanding of how enterprise information technology facilitates supply chain collaboration is still very limited, especially with regard to Chinese enterprise ownerships such as state-owned firms, joint-venture firms and local village-owned firms. This paper extends the theory established in enterprise information technology (IT) and supply chain collaboration literature and relates it with coordination in China-linked supply chain. Drawing upon an empirical study from 177 Chinese companies, we provide three major findings: (i) uncovered the importance of leveraging enterprise IT through supply chain collaboration; (ii) identified the relationship between enterprise ownership and enterprise technology use and supply chain collaboration in China-linked supply chain and (iii) illustrated effects of supply chain collaborative activities on operational and market performance.

The relationship between ownership and growth

The purpose of this paper is to investigate the relationship between
 ownership and employment growth. With a sample of 5,461 firms and using the Heckman two-stage model (to eliminate selection sample bias), the main findings are follows: Compared to firms with 100% capital ownership, domestic firms with less than 50% state capital, domestic private firms, joint stock firms without state capital, 100% foreign capital firms, and joint venture (non-state and foreign) firms have positively significant impacts on employment growth. A change in ownership is not significant to employment growth.
 The rest of this paper is organized as follows: Section 2 gives a literature review and some previous empirical evidence. Section 3 provides the econometric model for estimating firm growth. In Section 4, the data is described. Section 5 presents empirical results of the relationship between
 ownership and growth in Vietnam. The final section gives conclusions and policy implications.

Inter-Firm Technology Transfer and Performance in International Joint Venture Firms

The main objective of this paper is to empirically examine the effects of two distinct degrees of technology transfer: degree of tacit and explicit knowledge on two dimensions of performance: corporate and human resource performances. Using the quantitative analytical approach, the theoretical model and hypotheses in this study were tested based on empirical data gathered from 128 joint venture companies registered with the Registrar of Companies of Malaysia (ROC). Data obtained from the survey questionnaires were analyzed using the correlation coefficients and multiple linear regressions. The results revealed that degree of tacit knowledge, as a distinct dimension of degree of technology transfer, has a significant effect on both corporate and human resource performances; where its effect was much stronger on corporate performance. Similarly, degree of explicit knowledge has shown consistent strong significant effects on both corporate and human resource performance; where its effect on human resource performance was found much stronger than corporate performance. The study has bridged the literature gaps in such that it offers empirical evidence on the effects of two distinct degrees of technology transfer: degrees of tacit and explicit knowledge on two dimensions of performance: corporate and human resource performances in IJVs.

Inter-Firm Technology Transfer and Performance in International Joint Venture Firms

The main objective of this paper is to empirically examine the effects of two distinct degrees of technology transfer: degree of tacit and explicit knowledge on two dimensions of performance: corporate and human resource performances. Using the quantitative analytical approach, the theoretical model and hypotheses in this studywere tested based on empirical data gathered from 128 joint venture companies registered with the Registrar of Companies of Malaysia (ROC). Data obtained from the survey questionnaires were analyzed using the correlation coefficients and multiple linear regressions. The results revealed that degree of tacit knowledge, as adistinct dimension of degree of technology transfer, has a significant effect on both corporate and human resource performances; where its effect was much stronger on corporate performance. Similarly, degree of explicit knowledge has shown consistent strong significant effects on both corporate and human resource performance; where its effect on human resource performance was found much stronger than corporate performance. The study has bridged the literature gaps in such that it offers empirical evidence on the effects of two distinct degrees of technology transfer: degrees of tacit and explicit knowledge on two dimensions of performance: corporate and human resource performances in IJVs.

Determinants of schooling returns during transition: Evidence from Chinese cities

This paper uses 1988 and 1995 data from a national household survey to study across-region dispersions and changes over time in returns to education for a large number of Chinese cities and to analyze the determinants of schooling returns during economic transition. On average, the estimated rates of return at the city level increased from 3.1 to 5.1% between these two years and the dispersion widened significantly. During the same period, the gender earnings gap increased and the returns to experience and Communist membership rose sharply. Individual cross section and city-level panel data suggest that the presence of foreign and joint-venture firms, market job search channels, and information infrastructure contributed to increased returns to education. However, the size of the state sector constrained schooling returns. Journal of Comparative Economics 33 (2) (2005) 244–264.

Does Culture Affect Behavior and Performance of Firms? The Case of Joint Ventures in China

This study applies a resource-based view of the firm to analyze data from a sample of 898 joint-venture firms in China, including both joint ventures established by overseas Chinese and by firms from Western cultures. It is hypothesized that culture could influence the timing of entry of joint ventures, their investment preferences, and performance. ANOVAs and regressions were conducted, and the results suggest the impact of cultural as well as technological resources. This paper concludes with a discussion on the implications of the findings.

Operations strategy in an emerging economy: the case of the Ghanaian manufacturing industry

AbstractOperations strategy and its development have received a lot of attention in the operations management literature. However, as noted by Ward et al. (1995), an understanding of the factors that influence operations strategy development has not been widely studied. Further, how managers of firms in underdeveloped countries develop operations strategy has yet to receive any significant attention among researchers. This paper takes a look at the development of operations strategy in an underdeveloped economy, Ghana. Specifically, the paper examines the relationships between the business environment and the operations strategy choices made by firms in Ghana. The paper seeks to understand the influence that specific business environmental factors have on the operations strategy choices of low cost, quality, flexibility, and delivery dependability.A survey of manufacturing firms was carried out in 1998. The respondents (production managers in those firms) were asked to indicate the extent to which business costs, labor availability, competitive hostility, and environmental dynamism were of concern to them. They were also asked to indicate their extent of emphasis on the operations strategy choices of quality, cost, flexibility and delivery dependability. This paper presents the result of the analysis of the relationships between the environmental factors and the operations strategy choices. The data indicate that, among firms in Ghana, the two strongest factors that influence the degree of emphasis placed on operations strategy choices are perceived business costs and competitive hostility. Results are presented for both large and small firms, and for firms that are completely locally owned as well as for joint venture firms.

Doing Business in India: A Minnesota Entrepreneur's Experience

This paper describes the author's attempts to develop business with Indian family firms during the last three years. Specific features of the Indian business environment are discussed, along with information for those who desire to export Indian products to the United States. The paper also reviews experiences of large American firms that have joint ventures in India as an indication of what small joint-venture firms might expect in India. The author concludes that import-based activity is high risk and that joint-venture activity for small American firms cannot be recommended in India at this time. The paper explores some possible solutions to business risk that may increase business activity between small American firms and Indian family firms.

Joint ventures for entry deterrence

The literature of joint ventures has not discussed whether joint ventures may be used to deter entry. This paper then addresses how joint ventures may be used strategically for this purpose. Under the assumptions of linear demand and linear cost, as well as Stackelberg-Cournot interactions between incumbents and their joint venture firms, it is found that the incumbents can deter entry by creating independent joint ventures. Furthermore, it is shown that the optimal number of the joint ventures for the deterrence and the optimal deterrence strategies are functions of the number of potential entrants. Copyright © 1999 John Wiley & Sons, Ltd.

Managerial markets in transition in Central and Eastern Europe: a field study and implications

In this paper, we report findings from the first comprehensive study of managerial labour markets in Central and Eastern Europe, drawing on field data from 157 firms in six countries. Results indicated widespread and deep changes occurring in the region’s managerial markets. Despite differences among countries in reform and economic performance, we found these particular changes to be surprisingly common across the countries studied. They included rapid rises in salary and benefit levels, narrowing of some skill gaps, shifts to more sophisticated methods of recruitment and an overall move towards Western management practices. The study also revealed severe shortages of qualified managers in all the countries studied. The resulting tightness in the managerial labour markets was reducing only modestly, despite other improvements. Foreign and joint-venture firms were relying disproportionately on expatriate managers, and may not have been sufficiently developing locals. We argue that, partly because of this, the distortions in pay, promotions and performance resulting from these tight markets are likely to persist for some time.