Resource complementarity and international joint venture performance in Korea

The resource-based view of joint ventures (JVs) posits that JV performance is driven by JV partners’ ability to create synergy by joining complementary resources. We examine the synergy generated from resource complementarity in the context of JVs formed between developed market firms and local Korean firms. Besides the independent effects of both partners’ complementary resources on JV performance, we examined whether a joint effect on JV performance existed. We found that both technology-related resources and local knowledge-related resources affect JV performance independently and simultaneously. The impact of local knowledge-related resources on JV performance increased with the level of technology-related resources, and the impact of technology-related resources on JV performance increased with the level of local knowledge-related resources. Technology- and local knowledge-related resources are thus not simply additive; mutually enhancing synergies exist between the two resources. This finding further suggests that the synergistic effect of both partners’ complementary resources on JV performance can be substantive.     

Working effectively in strategic alliances through managerial fit between partners: some evidence from Sino–British joint ventures and the implications for R&D professionals

To succeed in R&D strategic alliances requires not only strategic fit and cultural fit at the organisational level, but also managerial fit at the micro, inter–personal interaction level. This paper provides the results from a cross–cultural study of managerial fit between British and Chinese managers in joint ventures (JVs) initiated in 1993–1998 with a focus on two important issues: the perceived competence and managerial roles of the partners. Managerial fit between partners is critical for the success of R&D strategic alliances including JVs. Misfit in partners' managerial behaviour often results from the fact that JVs are characterised by the lack of specificity of various managerial tasks shared by the partners at the operational stage. In addition, a manager's managerial competence as perceived by the counterpart is a contributory factor to trust and supportive reaction from the counterpart, both of which are important for cohesive interaction between partners. This study has revealed that (1) there are similarities and significant differences in some of the characteristics of managerial competence perceived by the counterpart between the British and Chinese managers; and (2) there is often a mismatch of perceptions between the British and Chinese managers with regard to who plays a particular managerial role in a JV. Managerial implications are discussed and issues for further research are highlighted.     

Are joint ventures positive sum games? The relative effects of cooperative and noncooperative behavior

Are joint ventures (JVs) characterized mainly by cooperative behavior or noncooperative behavior? In this research, we address this question by examining the interrelationship between the values created for two partners when they announce a JV. We argue that, on average, if cooperative behavior and common benefits are more influential than noncooperative behavior and private benefits, there will be a positive association between the values created for the two partners. Conversely, if private benefits and noncooperative behavior are more influential, there will be a negative association as partners derive value at the expense of each other rather than by creating new opportunities through the JV. Using a sample of 344 JVs we find evidence of a positive association between the values created for the two partners after controlling for various factors. This suggests that the stock market perceives JVs to be positive sum games rather than zero sum games, and that value creation in JVs is mainly attributable to synergies rather than appropriation of resources. Our analysis also reveals other conditions under which cooperative behavior and noncooperative behavior become dominant, such as the strength of the resources of the two partners, product market competition, and JV experience. Copyright © 2010 John Wiley & Sons, Ltd.     

The design of coordination and control mechanisms for managing joint venture–parent relationships

Joint ventures (JVs), defined as independent organizations formed by the pooling of resources and sharing of equity by two or more firms, are being formed at an increasingly rapid pace. While much empirical research has examined the conditions which favor the formation of JVs, less attention has been paid to the equally important issues of control and implementation which are the focus of interest in this study. We identify two factors which are expected to influence the design of control mechanisms, i.e., (1) the strategic interdependence between the JV and each parent and (2) the environmental uncertainty faced by the JV. Our empirical examination confirms the importance of the degree of strategic interdependence and the moderating role of environmental uncertainty in explaining the design of control mechanisms. © 1998 John Wiley & Sons, Ltd.     

Dialectical tensions and path dependence in international joint venture evolution and termination

This paper identifies how dialectical tensions influence the conflicts in and unplanned terminations of international joint venture (IJV) relationships. The findings from case studies of two Finnish-Chinese JVs show how initial tensions and institutional imprints set the IJV processes in motion; how critical junctures influence perception of the IJV relationship and its evolution; and how a lack of efficient communication, interlinks between dialectical tensions, and insufficient movement of trust between cultural, organizational, and individual levels in the relationship lock in action patterns of confrontation which lead to the termination of the IJV. In essence, this study contributes to international business research by explaining the path-dependent nature of dialectical tensions in the evolution and survival of cross-cultural JVs.     

Institutions,resources, and entry strategies in emerging economies

We investigate the impact of market‐supporting institutions on business strategies by analyzing the entry strategies of foreign investors entering emerging economies. We apply and advance the institution‐based view of strategy by integrating it with resource‐based considerations. In particular, we show how resource‐seeking strategies are pursued using different entry modes in different institutional contexts. Alternative modes of entry—greenfield, acquisition, and joint venture (JV)—allow firms to overcome different kinds of market inefficiencies related to both characteristics of the resources and to the institutional context. In a weaker institutional framework, JVs are used to access many resources, but in a stronger institutional framework, JVs become less important while acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded. Combining survey and archival data from four emerging economies, India, Vietnam, South Africa, and Egypt, we provide empirical support for our hypotheses. Copyright © 2008 John Wiley & Sons, Ltd.     

Influences on Sino-Western joint venture negotiations

This paper attempts to increase the reader's knowledge of the influences present when negotiating in China. The current environment of Sino-Western joint venture (JV) negotiations is examined, and negotiating suggestions resulting from this examination are presented. The paper, the result of the author's research in China in 1987–1989, posits that the major influences on Sino-Western JV negotiations are the ideological and theoretical foundations for such JVs, their history, the problems they experience, and the political, economic, governmental, and cultural contexts of negotiations. The paper's importance lies in two areas: it contributes to the literature on the international transfer of capital and technology, and it provides valuable information to Western firms and individuals who consider entering into JV negotiations in China.     

Local Ownership Restrictions, Entry Mode Choice, and FDI Performance: Japanese Overseas Subsidiaries in Asia

This study examines the moderating effects of a host government's local ownership restrictions on the linkage between the choice of foreign entry mode and its performance, using a sample of 917 Japanese foreign subsidiaries in Asia. The study focuses on two foreign entry modes, joint ventures (JVs) and wholly-owned subsidiaries (WOS), and two performance measures, financial performance and termination rate. The results suggest that the extent of local ownership restrictions is negatively and significantly associated with the financial performance of WOS, whereas it does not directly influence that of JVs. There is no clear association between the extent of local ownership restrictions and the termination rate for the JV and WOS samples.     

CEO transformational leadership and firm performance: A moderated mediation model of TMT trust climate and environmental dynamism

This study examines the role of top management team (TMT) trust climate in the relationship between CEO transformational leadership (TFL) and firm performance under dynamic environments. The research results based on a sample collected from firms in Vietnam show that TMT trust climate is a key mediator which can convert CEO TFL into better performance outcomes. Moderated-mediation analyses further reveal that the mediating effect of TMT trust climate is more significant in less dynamic environments. Our study contributes to the TFL theory by identifying a critical mechanism that intervenes in the relationship between CEO-level TFL and firm performance. We reveal how CEOs exert leadership influence on subsequent TMT dynamics and performance outcomes by navigating external environments. Moreover, our study offers insights with regard to the trust theory by uncovering TMT-level intragroup trust as a mediator, and thus complements most of prior examinations that focus on the moderating role of trust in workplace team contexts.     

How does trust affect alliance performance? The mediating role of resource sharing

Although the direct impact of trust on alliance performance is well documented, little is known about how trust affects alliance performance. Based on the resource-based view, this study develops a model that employs resource sharing as a critical mediating mechanism through which trust affects alliance performance. Using survey data from 205 Chinese firms that were engaged in alliances, we find broad support for the mediated effects of trust. Interestingly, we also find that goodwill trust matters more to tangible than to intangible resource sharing, whereas competence trust matters more to intangible than to tangible resource sharing. Overall, our research provides important implications for firms seeking to translate their trust into superior alliance performance.     

Open Innovation in Practice: Goal Complementarity and Closed NPD Networks to Explain Differences in Innovation Performance for SMEs in the Medical Devices Sector

Cooperation with other organizations increases the innovation performance of organization, especially for small and medium‐sized enterprises (SMEs) as they encounter liabilities of “smallness” (e.g., limited financial resources, and manpower). In the medical devices sector, collaboration with external partners for NPD becomes increasingly important due to the complexity of the products and the development process. About 80% of companies in this sector are SMEs. These companies operate in a highly regulated sector, which affects the organization of the external network required for the new product development (NPD) process. SMEs are practicing extensively open innovation activities, but in practice face a number of barriers in trying to apply open innovation. This paper examines multiple network characteristics simultaneously in relation to innovation performance and thereby aligns with and builds further on configuration theory. Configuration theory posits that for each set of network characteristics, there exists an ideal set of organizational characteristics that yields superior performance. In this research, the systems approach to fit is used. Fit is high to the extent that an organization is similar to an ideal profile along multiple dimensions. This ideal profile represents the network profile that the 15% highest performing companies use. It is argued that the smaller the distance between the ideal profile and the network profile that is used, the higher the performance. The objective of this research is (1) to examine the relation between the ideal profile and innovation performance and (2) to examine which organization of the network profile is related to high innovation performance. Quantitative survey data (n = 60, response rate 61.9%) form the core of this research. The quantitative results are clarified and have been triangulated with qualitative interview data (n = 50). Our findings suggest the presence of an “ideal” NPD network profile (in terms of goal complementarity, resource complementarity, fairness trust, reliability trust, and network position strength): the more a company's NPD network profile differs from this ideal profile, the lower the innovation performance. In addition, the results of our study indicate that the NPD network profiles of successful and less successful SMEs in the medical devices sector significantly differ in terms of “goal complementarity,” while this is less the case for trust and resource complementarity labeled distinctive by previous research. Finally, results show that a relatively closed, focused, and consistent “business‐like” NPD networking approach, which is characterized by result orientation and professionalism, is related to high innovation performance. It is recommended that SMEs in the medical devices sector aiming to distinguish themselves from competitors in terms of innovation performance focus on goal complementarity while adopting such a business‐like attitude toward their NPD network partners.     

高技术产业集群的信任与声誉机制研究

高技术产业集群的“竞合关系”表现出“合作关系占主导,竞争关系为辅助”的关系结构;高技术产业集群内部经济主体具有长期合作的主观倾向;高技术产业集群的网络治理机制可以分为正式机制与非正式机制。从关系结构与网络成员的机会主义行为分析入手,对高技术产业集群非正式网络治理机制——信任文化和声誉机制进行了研究;高技术产业集群的信任体系结构包含五个层次,信任是网络型组织的基本运行机制,建立高绩效网络的最重要的要求是信任或社会认同。信任机制可以降低组织之间的交易成本;高技术产业集群以企业为主体的网络具有开放性,声誉机制的扩散效应更为明显,高技术产业集群声誉机制的重要含义在于拓展了交易范围与交易空间,为技术创新提供了更多的资源选择,使潜在交易对象可以演变为现实的可利用资源。     

Asymmetric information and joint venture performance: theory and evidence for domestic and international joint ventures

The increased number of perspectives on joint ventures (JVs) raises important issues for theory development on interfirm collaboration. In this paper, we bring together two key theoretical perspectives on joint ventures—the asymmetric information perspective and the indigestibility view. On a theoretical level, we focus on the relationship between these two different explanations of joint ventures. We also present new evidence on the firm valuation effects of JVs in domestic and international investment contexts. The findings lend support to the asymmetric information perspective on resource combination through joint ventures. Copyright © 2000 John Wiley & Sons, Ltd.     

Trust as Networking Knowledge: Precedents from Australia

Trust, rather than being simply a resource for establishing collaborative relationships between organizations, is an essential component of their constitution. At base, trust involves interpersonal relations of a specific type. These are relations where there is sufficient probability that a person or organization with whom one is in contact will perform an action that is beneficial, or at least not detrimental, for one to consider engaging in some form of cooperation with this person or organization in the future. Trust establishes situations in which participants in collaboration have a long-term and recurrent relationship. Where trust exists, organizations are more willing to collaborate with other organizations on a more reciprocal basis. Trust is especially important when collaboration takes place between competitors because the risk of opportunistic behaviour is higher. Where organizations share resources and information openly with other participants they will seek to reduce opportunistic behaviour through the mutual understanding and goodwill of parties. However, trust is not static; it is a dynamic process that evolves according to the development of the relationship, as one in which the more long-term the relationship, the greater the trust. In this paper, we will present the impact of trust on business networks and examine how their members developed knowledge through networking.     

Do resource differences between manufacturers and suppliers help or hinder product innovation of manufacturers? The moderating role of trust and contracts

It is a common practice of manufacturers to involve suppliers in new product development (NPD). Extant literature indicates that supplier integration has mixed effects on manufacturers' NPD and the contradicting findings result from either the external contingent factors or the tactical integration practices. We argue instead that the mixed effects are rooted in resource differences between manufacturers and suppliers. Further, we examine the functions of trust and contracts as the resource integration and coordination mechanisms to manage the effects of resource differences on product innovation of manufacturers. Based on a survey among 189 manufacturing firms, our research shows that resource differences follow an inverted U-shaped effect on product innovation of manufacturers and that trust strengthens while contract complexity attenuates the curvilinear relationship. As such, our research extends the existing body of literature to account for the divergent outcomes of supplier integration from the perspective of resource differences. Moreover, it demonstrates the double-edged effects of trust and contracts as devices of resource integration and coordination. Our research offers useful research and managerial implications.     

The Moderating Effects of Virtuality on the Antecedents and Outcome of NPD Team Trust

The fundamental dynamics of virtual and traditional face-to-face teams may be very different. The purpose of this study is to empirically examine and assess the moderating effects of virtuality on the antecedents and outcome of trust, where virtuality is measured along a continuum from face to face (no virtuality) to fully virtual rather than the more common approach of dichotomizing teams into two groups (i.e., face to face and virtual). The sample includes 116 different new product development teams from a variety of industries. The antecedents of trust that are studied are familiarity, goal clarity, training, relationship conflict, and process conflict. The outcome of trust is analyzed by determining how the impact of trust on cooperation changes as the level of virtuality changes. Primary findings are as follows: (1) Relationship conflict can be more detrimental to virtual teams than face-to-face teams because it is very difficult for team members of virtual teams to resolve their interpersonal disputes; (2) goal clarity is more important for face-to-face teams and less important for virtual teams in creating trust among team members; and (3) the impact of trust on cooperation is less for virtual teams than face-to-face teams. The primary implication for researchers and practice of these findings is that the role and importance of trust in virtual teams needs to be reevaluated. Managers using virtual teams need to realize that interpersonal relationships in virtual teams do not evolve in the same manner as face-to-face teams and may require different management techniques to be successful.     

Exporter-importer relationship quality: The inhibiting role of uncertainty, distance, and conflict

The article examines the impact of uncertainty, distance, and conflict on key elements comprising the quality of the relationship between U.S. industrial exporters and their overseas customers. Information received from 151 manufacturers revealed that these three parameters play a significant negative role in building sound relationship quality, in terms of adaptation, commitment, communication, cooperation, satisfaction, trust, and understanding — which, in turn, may inhibit the firm's progression along the internationalization path. Specifically, an inverse association was found between uncertainty, distance, and conflict, on one hand, and commitment, cooperation, and satisfaction, on the other. In addition, in relationships characterized by high uncertainty, adaptation, communication, trust, and understanding were low. In high distance relationships, communication was insufficient, and in high conflict situations, trust and understanding were low. Several managerial implications are extracted from the study, as well as directions for future research.     

Relationship governance for very different partners: The corporation-nonprofit case

Organizations increasingly form relationships with partners that have goals, values or operating cultures different to their own. These relationships have significant potential to generate innovative products or services and increase opportunities for service delivery. While they can provide greater access to resources, infrastructure or stakeholders, they can struggle with collaboration. Such partnerships may also encounter differences in the role of governance mechanisms such as trust and commitment. Only limited research however has addressed the governance implications of such relationships. We compared managers' perspectives on relationship governance mechanisms for 267 nonprofits and 276 corporations involved in corporate-nonprofit relationships. We found that ‘fit’ - compatibility and complementarity - was important to performance in such relationships. We found also however that nonprofits valued the role of trust in these relationships significantly more than corporations. Our findings suggest potential for significant success in these types of relationships but also possible complications from differences of opinion as to how they should be governed. While relationships between very different partners can succeed, they should remain cognizant of differences in each partner's expectations for relationship governance and its role in relationship performance.     

Product and relationship quality influence on customer commitment and loyalty in B2B manufacturing relationships

The article examines how product and relationship quality influence customer commitment along with their combined effect on customer loyalty. The results show that product quality influences positive and negative calculative commitment. With regard to relationship quality, its “social” dimensions such as cooperation and trust have a much greater influence on commitment than its “technical” dimensions such as knowledge transfers and adaptation. On the “social” side, cooperation and trust positively influence affective and normative commitment, with trust also positively affecting positive calculative commitment, while on the “technical” side the only significant link is between adaptation and normative commitment. As for the consequences of commitment, affective commitment positively influences attitudinal and behavioral loyalty, while negative calculative commitment positively influences behavioral loyalty. In addition to indirect effects, product quality also directly positively influences attitudinal and behavioral loyalty. The results imply that customer loyalty depends more on “emotional” (affective commitment) than on “rational” (negative calculative commitment and product quality) motivation to continue the relationship.     

Risk management system in business relationships—Polish case studies

The article discusses the problem of risk management in business relationships. The authors' research (including a case study analysis of 5 different relations) enabled them to identify and characterize the risk management systems based on a combination of formal control and relational mechanisms. In the authors' research it has been assumed that relational risk has a negative influence on the cooperation results and therefore it should be a subject of management. The main objective is not to avoid taking risk in relationships, but to reduce it to the minimum possible level. Companies' cooperation, including partnerships with different entities and participation in business networks, is an immanent characteristic of contemporary business. Therefore managers should look for the most efficient methods of dealing with additional relational risk and opportunistic behavior of potential partners.In the paper the case study analysis of five relationships of companies operating on Polish market was presented. The main objective was to demonstrate the relation between the level of trust and the intensity of formal control (including contract and formal monitoring). The range of social control applied in analyzed relationships was also an important issue of consideration.The research presented in the paper indicated that companies located in Poland in order to reduce relational risk aimed at diversification of its partners or full integration. Managers often underlined their fear of being dependent on one particular partner. This phenomenon could comprehensively decrease the advantages of intensive and deepened inter-organizational cooperation in Poland. Furthermore, the research demonstrated the decisive role of relational mechanisms and limited significance of contract in business relationship risk management. However, relatively higher importance of contract was observed in unbalanced relations between partners representing diverse bargaining power. A positive relationship between application of relational tools and cooperation results was identified as well.The aim of the paper is to demonstrate the nature of the relationship risk management system and the role of particular mechanisms that enable to reduce risk and its negative influence on cooperation results.