Cross-Border Knowledge Transfer and Performance in Emerging Economic Regions: the Case of Japanese International Joint Ventures in China

Cross-Border Knowledge Transfer and Performance in Emerging Economic Regions: the Case of Japanese International Joint Ventures in China

By Takehiko Isobe, Shige Makino, David Bruce Montgomery
Working Paper No. 1518

As emerging economic regions (EERs) play a significant role in global economies, managers of multinationals have become increasingly aware of the importance of relevant international expansion in these regions. Facing potential market opportuinites, the managers are eager to gain first mover advantages and build technology leadership in the EERs. However, given notrivial uncertainties in EERs, the efforts to be first movers and technology leaders in theses regions may not result in successful performance. This study examined whether first movers and technology leaders would attain superior performance in EERs. Building on the literature on knowledge transfer, we focused on two key constructs of cross-border knowledge transfer: the values of knowledge being transferred and the speed of knowledge transfer. We argued that the fromer would increase the likelihood that the firms gain technology leadership, and the latter is related to first mover advantages in the local marketplace. The study examined both the determinants and performance of these constructs, using the survey data of over 220 Sino-Japanese joint ventures in China. The results suggeted that both the value of knowledge being transferred and the speed of knowledge transfer had positive impacts on the perceived economic performance in EER markets. Yet, this relationship was found to be significantly contingent upon several internal and external factors, such as the strategic importance of investment, the extent of parental control within the JV, and the avilabiltiy of complementary assets.