R&D intensity and international joint venture performance in an emerging market: moderating effects of market focus
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R&D intensity and international joint venture performance in an emerging market: moderating effects of market focus and ownership structure Yan Zhang1, Haiyang Li1, Michael A Hitt2 and Geng Cui3 1 Jesse H. Jones Graduate School of Management, Rice University, Houston, TX, USA; 2 Department of Management, Texas A&M University, College Station, TX, USA; 3 Department of Marketing and International Business, Lingnan University, Hong Kong
Correspondence: Y Zhang, Jesse H. Jones Graduate School of Management, Rice University, Houston, TX 77005-1892, USA. Tel: þ 1 713 348 2462; Fax: þ 1 713 348 6296; E-mail: [email protected]
Abstract In this study we examine the contingent relationship between R&D intensity and performance of international joint ventures (IJVs) in an emerging market context. Based on Teece’s (1986) arguments regarding the appropriability of innovation, we identify two types of appropriability hazard related to IJVs’ R&D activities in this context: local-market-related and local-partner-related hazards. We argue that a positive relationship between R&D intensity and IJV performance is more likely to occur if these appropriability hazards can be mitigated. Results using a sample of manufacturing IJVs in China provide support for these arguments. We find that R&D intensity is positively related to performance in export market-focused IJVs but not in local market-focused IJVs. In addition, using a configuration approach, we find that R&D intensity is positively related to performance in IJVs that have an export market focus and in which the multinational companies (MNCs) have a majority ownership, but not in other market focus-ownership structure configurations. These findings contribute to our knowledge of R&D activities of MNCs’ overseas subsidiaries. Journal of International Business Studies (2007) 38, 944–960. doi:10.1057/palgrave.jibs.8400301 Keywords: R&D intensity; appropriability international joint ventures; emerging market
Received: 24 January 2006 Revised: 27 February 2007 Accepted: 20 March 2007 Online publication date: 19 July 2007
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Introduction Recent research has emphasized the increasing internationalization of R&D activities and their importance to multinational corporations (MNCs) (e.g., Birkinshaw, 1997; Kuemmerle, 1999; Belderbos, 2003). Driven by increased market competition and rapid technological changes, MNCs need to invest in R&D activities in ways that maximize innovation and enhance their global competitiveness. Many MNCs are diffusing headquarters functions geographically and moving R&D activities to locations abroad (Cantwell, 1989; Cheng and Bolon, 1993; Kuemmerle, 1999; Zhao, 2006). Several scholars have argued that R&D investment in overseas subsidiaries can help MNCs exploit their firm-specific resources, improve their local responsiveness, and ensure sustainable competitive advantages globally (Ghoshal and Bartlett, 1988; Birkinshaw, 1997; Kuemmer
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