Corporate venturing: alternatives,obstacles encountered,and experience effects

In this study of a relatively small number of corporate executives with line experience in corporate venturing, some clues are uncovered that could help those corporations contemplating the initiation of acquisition, joint venturing, or corporate start-up activities to avoid or overcome the obstacles that our sample of managers encountered.The preliminary indications are;

• 1.1. Joint ventures appear to be a highly useful way of starting off in venturing activity while at the same time reducing the initial risk.
• 2.2. The excutives in this sample indicated that experience at venturing resulted in improvement in venturing performance, but only after several venture attempts. From this observation, two suggestions appear reasonable: 1) Start venturing with few relatively small ventures and keep ventures relatively small until experience is gained. Start perhaps with joint ventures to learn your way in and “graduate” to grass-roots start ups once significant learning has taken place; and 2) The experience gained will reside in people who may have been part of an unsuccessful venture, perhaps several unsuccessful ventures. If this experience is to be useful, the people who have gained it need to be retained and recycled to other new ventures.
• 3.3. Although some of the obstacles perceived by the executives diminish with experience, others do not. Regardless of experience, inability to plan for new ventures is a recurrently cited obstacle, as is the inability of the corporation to provide adequate support to the venture.

The last point may be the most significant observation in this study. Prevailing corporate values call for the ability to plan and to meet the plan as one of the primary measures of managerial competence. New ventures, however, rarely conform to plan, especially the quantitative projections. As a result, corporate support either dwindles when plans are not achieved or desperate spending efforts are made to achiev unachievable planned results, which often results in large losses. Very different planning methods are needed for ventures, methods that, in the highly uncertain surroundings of venturing activity, address what realistic corporate expectations should be, how progress should be measured and venture managers evaluated, and in what ways and at what times support will be provided by the parent corporation. These are discussed in the main body of the article.     

An Investigation of Control and Performance in U.S.-Chinese Joint Ventures

ABSTRACT

This study took an integrated approach to managerial control in international joint ventures (IJVs). The various control mechanisms used in U.S.-Chinese joint ventures were examined. The linkage between control and performance was empirically tested using a sample of U.S.-Chinese joint ventures established in China during the period of 1979–1989. The findings support the hypothesis that effective managerial control exercised by the U.S. partner over the joint venture operation is positively related to its performance. U.S.-dominant joint ventures significantly outperformed Chinese-dominant joint ventures, but no significant performance differences were found between U.S.-dominant joint ventures and shared management joint ventures.     

Acquisition of managerial knowledge from foreign parents: evidence from Korean joint ventures

This paper contributes to the literature on intra- and inter-firm knowledge transfer by examining knowledge acquisition by Korean international joint ventures from their foreign parents. A conceptual model is presented which identifies the factors that have been found to influence knowledge transfer, organised into variables related to the local recipient firm, the foreign sender firm and the relationship between the two. The model is examined by means of a series of multiple regressions using a sample of 128 Korean international joint ventures. We find that: (1) the international joint ventures intent to learn and international experience; (2) the level of trust between parents and their business relatedness; and (3) the active managerial engagement of the foreign parent are the most important factors explaining the level of knowledge acquisition within the international joint ventures.     

Cooperative learning in creating and managing joint ventures

This study examines how and under what conditions joint ventures facilitate cooperative learning. The study analyzes how a joint-venture approach facilitates initial learning in the cooperative process and considers to what extent inter-organizational factors such as commitment, trust, control and conflict resolution affect the partners involved. The study then compares these hypotheses based on a sample of 74 international joint ventures (IJVs). The results provide empirical evidence to show that commitment is both a significant and essential variable, yet they also illustrate that this type of cooperation is not enough on its own for partners to learn how to cooperate effectively.     

Linking prefunding factors and high-technology venture success: An exploratory study

This study reports on the exploratory phase of a research project on prefunding factors influencing the success of high-technology start-up companies. The study was done in collaboration with two major West Coast venture capital firms that allowed the authors full access to the due diligence files, investment proposals, and closing documents associated with eight ventures. Half of the eight ventures studied are currently public companies with sales that range from $65 million to $500 million and with an after-tax profit of about 10% of sales. The other half have either been dissolved or did not reach $3 million in sales within the five years following their funding.Information was obtained on those prefunding factors that were available for investor review prior to funding, such as the founders track records, the characteristics of the founding team, the nature of the target market, the technological strategy of the firm, the proposed composition of the board, and the deal structure.In spite of the small sample size, findings of this research revealed discernible differences between successful and unsuccessful firms. The founders of the successful ventures had more prior experience working together; tended to form larger, more complete teams; and had more extensive experience in the function they performed in the new venture. Successful founders also had experience in rapid growth firms that competed in the same industry as the start-up.The successful ventures targeted product-market segments with high buyer concentration in which, through technological advantage, their products could attain and sustain a competitive edge. Often this advantage was achieved by careful management of the product-development process, which resulted in early market entry and its corollary, reduced competition.On the other hand, some factors that the authors had predicted would allow them to distinguish between success and failure were not found to do so. Both successful and unsuccessful ventures targeted high growth markets, anticipated high gross margins, had founders with over five years of relevant experience, had experienced venture capitalists on their boards, and were characterized by a wide range of founder equity shares.     

Chinese Perceptions of Issues and Obstacles Confronting Joint Ventures

In China one of the most effective means of attracting foreign capital to undertake its four modernizations is through the creation of joint ventures. The Chinese are striving for pragmatic results and emphasize that joint ventures should provide mutual benefits for both parties. Many joint ventures should provide mutual benefits for both parties. Many joint venture participants from the U.S.A. have become disillusioned and are frustrated by obstacles including government bureaucreatic interference, cultural differences, and a lack of managerial know-how by the Chinese. Based on a survey of 182 Chinese businessmen, 100 of whom engaged in joint ventures, it is evident that the CHinese share these concerns. Their perceptions provide guidelines for coping with these obstacles and clearly indicate the importance of "quanxi" in attaining the goals of joint ventures.     

The influence of cultural differences in cooperative learning through joint ventures

This study analyzes the influence on interorganizational learning attributed to differences in organizational cultures of partnering firms, through joint ventures. We attempt to carry out an in-depth analysis into the type of influences involved and whether they are positive or negative, or if they foster or hinder learning. We analyze a sample consisting of firms that had entered into a joint venture and then contrasted our hypotheses against the sample using structural equations. The results confirm the existence of a degree of influence and conclude that this influence is positive for this type of learning.     

Do culturally distant partners choose different types of joint ventures?

Studies of international joint ventures yield conflicting results when looking at the role played by cultural distance. We argue that managers understand the problems associated with cultural distance and seek to mitigate its impact by selecting certain types of joint ventures. Using Das and Teng's [Das, T. K., & Teng, B.-S. (2001). A risk-perception model of alliance structuring. Journal of International Management, 7(1): 1–30] typology of unilateral and bilateral alliances to categorize a sample of ventures based on their strategic focus, our results indicate that greater cultural distance is associated with an increased probability that a marketing or supplier alliance will be formed and a lower probability that an innovation-oriented alliance will be formed.     

Joint Ventures in Russia

There is an extensive literature on the role of joint ventures in international business. Most of this has focused on the involvement of multinational enterprises (MNEs) in establishing joint ventures in developing countries. Recent political and economic reforms in Eastern Europe have focused attention on joint venture opportunities in ex-centrally planned economies, including opportunities for small and medium-sized enterprises. This paper examines the experiences of two small, family owned Scottish companies in establishing joint ventures in the largest of the East European countries, the Russian Federation. The cases highlight the important strategic and managerial issues involved in planning, negotiating and implementing joint ventures with Russian partners. Sensitivity to the business development needs of the host organization, the establishment of good personal relationships and flexibility are crucial to the joint venture process.     

Impact of growth strategy on mode of governance in alliances

The aim of this study is to analyse the way in which growth strategies influence the choice of governance mode in corporate alliances. Specifically, the study looks at how expansion, diversification and internationalisation strategies determine choice of joint ventures rather than other types of alliances. To that end, we analysed a sample of 918 alliances among companies from the European Union-15 between 2000 and 2004. The results suggest that companies prefer to set up joint ventures when their strategies are based on expansion and related diversification, whereas they prefer other types of alliances when they follow a strategy of unrelated diversification. Furthermore, in international alliances, it appears that the impact of growth strategy on alliance governance mode is similar for the entire range of companies employed in the sample.     

Competitiveness in information technology service exports

The US service export base is expanding rapidly as firms seek to penetrate international markets in search of growth opportunities. This article explores mechanisms that a sample of 67 US-based information technology (IT) firms use to export their services to one selected market, Mexico. A correlation analysis revealed that most firms adapt and extend existing IT services for the Mexican market, and consider cultural understanding imperative to successful operations in Mexico. The results also found that firms use a variety of business arrangements (joint ventures, licensing) and a wide array of contract vehicles (time and materials, firm fixed price). © 1995 John Wiley & Sons, Inc.     

East-West Joint Ventures in the Soviet Union:

Last two decades of the East European experience prove the enclave model of East-West joint ventures not viable. The promising integrative model presupposes much better structural conditions in the economy. Until at least 1995, structural determinants of the Soviet-based joint ventures will largely reduce them to enclaves; therefore the joint venture expansion in the USSR will be constrained.     

外商在中外合资合作企业中投资违约的实证研究

近几年外商在中外合资合作企业中当年未按合同出资的比例占40%和50%左右,违约行为相当严重。本文选取8833家中外合资企业和合作企业,运用OLS和二元Logistic回归对外商的投资违约行为进行实证研究。该研究对我国企业和政府具有借鉴意义,有助于我国企业更正以往的错误操作,确定合理的合资合作策略,同时有助于政府明确管理合资合作经营的政策取向。     

Exploring location‐specific assets and exploiting firm‐specific advantages: an integrative perspective on foreign ownership decisions

Exploiting existing assets and exploring new assets are two major and often concurrent forces driving firms to invest abroad. Moving beyond prior attention to their separate effects on foreign ownership decisions, this study examines their integrative impact. I develop hypotheses aligning a set of firm‐specific advantages with asset‐seeking motives, and test these relationships on a sample of Taiwanese overseas investments. I find that wholly‐owned subsidiaries are preferred to joint ventures when multinationals are able to tap into host innovatory dynamism by employing extant technological capabilities and to access local natural resources by leveraging corporate scales. Nonetheless, multinationals face difficulties in deploying marketing knowledge in different contexts and thus are more likely to choose joint ventures for an aggressive foreign market entry. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Market reaction to international joint venture announcement: The case of developed versus less developed countries

Joint ventures across national borders are more advantageous than other forms of international diversification because they afford a better control of technology usage, require a minimal level of cash investment, and present a more effective means of avoiding intervention from the host government. All of these characteristics make international joint ventures uniquely suitable for investments in less developed countries. This paper ascertains whether investors agree with the above sentiment by examining the stock market response to 41 announcements of international joint ventures during 1985-1987, using the event study method. It was found that the stock of the multinational corporations announcing international joint ventures generally outperforms the market In addition, the market reaction to the announcement of international joint ventures in less developed countries is, on average, more favorable than its reaction to the announcement of international joint ventures in developed countries.     

Toward a Resource-Based Theory of Bargaining Power in International Joint Ventures

Political, cultural, industrial, and firm-specific factors comine to make the bargaining relationship between international joint ventures partners a particularly complex one. This study focuses on one aspect of the problem: the relationship between the resources that a partner contributes and the bargaining power that it achieves in the venture. It traces ideas of bargaining power in the literature, to elicit what types of resource are likely to lead to dominance, the identifies several resources generally thought to be important contributions to a joint venture. The resources are ranked according to criteria of tacitness and appropriability, then displayed in matrix form to illustrate the expected outcome of bargaining in two-party international joint ventures.     

The 'Host' State and the 'Guest' Worker in Malaysia: Public Management and Migrant Labour in Times of Economic Prosperity and Crisis

In this contribution, the author reviews the current trends in HRM in the People's Republic of China. He then traces the impact of the post-1992 and 1995 economic reforms on Chinese personnel and industrial relations systems in both joint ventures and state-owned enterprises. Next, data from a recent field-investigation is reported vis-2-vis dimensions of HRM in these enterprises. The contribution particularly focuses on the problems of dimensionalizing HRM practices in such contexts. The author concludes that there may now be a growing but still limited overlap between joint ventures and state-owned enterprises in terms of their human resource policies and practices.     

企业核心竞争力识别方案研究

在探讨国内外有关核心竞争力识别方案的基础上,提出了企业核心竞争力识别标准,确立了核心竞争力的识别模式;建立了通过识别关键成功因素来确定企业核心竞争力识别指标体系的定量方法,明确了企业核心竞争力的识别范围;同时通过企业在关键成功因素上的竞争力相对强度比较分析,建立了企业核心竞争力定量识别方案。     

Determining international strategic alliance performance: A multidimensional approach

This paper considers the relationship between subjective, multidimensional measures of international strategic alliance (ISA) performance and predictors of success both before the alliance is formed (pre-alliance formation factors) and during the operation of the alliance (post-alliance formation factors). The empirical study, based on a web-survey, investigates a sample of Danish partner firms engaged in 48 equity joint ventures and 70 non-equity joint ventures with partners from around the world. A multi-dimensional operationalization of alliance performance measurement is utilized in order to capture both process and outcome aspects of alliance performance. The results show a significant relationship between alliance performance and host country risk as well as partner reputation preceding alliance formation. During the operation of the alliance, relationships between collaborative know-how, trust, protectiveness, complementarity, cultural distance and alliance performance were found.