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Dual-edged tools of trade: How international joint ventures help and hinder capability building of Chinese firms

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  • Li, Jing
  • Zhou, Changhui

Abstract

Forming international joint ventures (IJVs) with multinational corporations (MNCs) from advanced economies has been widely adopted by firms in emerging economies as an organizational approach to building up their innovative capabilities. In this paper, we emphasize that such an approach has both advantages (knowledge transfer from MNCs) and disadvantages (overdependence upon MNCs and reduction of innovation incentives) in the capability building of indigenous firms. Utilizing a longitudinal dataset consisting of 474 industries in China during 1998-2002, we find supporting evidence for the co-existence of the positive and negative impacts of IJVs. Specifically, we find that IJV presence has an inverted U-shape impact on innovative capabilities of indigenous firms; such an impact is stronger in industries with low (versus high) technology gap. We discuss the implications of our findings for research, managerial practice, and government policy.

Suggested Citation

  • Li, Jing & Zhou, Changhui, 2008. "Dual-edged tools of trade: How international joint ventures help and hinder capability building of Chinese firms," Journal of World Business, Elsevier, vol. 43(4), pages 463-474, October.
  • Handle: RePEc:eee:worbus:v:43:y:2008:i:4:p:463-474
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Suk Choi & Christopher Williams, 2014. "The impact of innovation intensity, scope, and spillovers on sales growth in Chinese firms," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 25-46, March.
    2. Contractor, Farok J. & Woodley, James A., 2015. "How the alliance pie is split: Value appropriation by each partner in cross-border technology transfer alliances," Journal of World Business, Elsevier, vol. 50(3), pages 535-547.
    3. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    4. Li, Peter Ping, 2010. "Toward a learning-based view of internationalization: The accelerated trajectories of cross-border learning for latecomers," Journal of International Management, Elsevier, vol. 16(1), pages 43-59, March.
    5. Snejina Michailova & Elena Sidorova, 2010. "Knowledge Management In Transition Economies: Selected Key Issues And Possible Research Avenues," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(1).
    6. Beamish, Paul W. & Lupton, Nathaniel C., 2016. "Cooperative strategies in international business and management: Reflections on the past 50 years and future directions," Journal of World Business, Elsevier, vol. 51(1), pages 163-175.

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