Measuring Performance Of Sino‐Japanese Joint Ventures In China: The Relationship Among Methods, Parties, Approaches, And Impact Of National Culture
| DOI | https://doi.org/10.1108/15587890880000492 |
| Published date | 01 September 2008 |
| Date | 01 September 2008 |
| Pages | 67-73 |
| Author | Lung‐Tan Lu |
| Subject Matter | Strategy |
Journal of Asia Business Studies FALL 2008 67
INTRODUCTION
The way in which to enter a foreign market successfully has been a
major issue in the field of international business research (Anderson
and Gatignon 1986). Some market entry strategies could be used
for firms such as export, licensing, joint venture (JV), and wholly
owned subsidiary (WOS), but joint venture is probably the most
popular form. As one of the major entry modes since the 1980s,
joint ventures are formed because of the following advantages: access
to markets, cost and knowledge sharing, economies of scale, effi-
ciency improvement, and enhancement of competitiveness of parent
firms (Auster 1987, Harrigan 1988, Glaister and Buckley 1996). In
contrast, the disadvantages of cooperating with a foreign partner may
lead to conflict and dissolution due to cultural differences (Barkema
et al. 1996, Shenkar and Zeira 1992).
Over the past 20 years, the economic growth in China has explod-
ed following the economic reform. The growth of GDP in real terms
reached almost 9 percent on average in the 1990’s, which is the highest
and most stable period after the Second World War. China becomes
the biggest Foreign Direct Investment (FDI) inflow in the world. FDI
has shared a major role in the economy growth and reached $ 72.4 bil-
lion in 2005 (UNCTAD: World Investment Report 2006). China now
attracts FDI successfully whilst the investment climate is in growing
markets and the possibility of establishing joint ventures.
International joint venture (IJV) has been one of the most popular
modes of entry to the China market for foreign companies since the
1980s (Luo 2002). However, the impact of cultural difference on IJV
is one of the biggest difficulties that should be overcome by local,
foreign parent firms, and IJV general managers. IJV performance has
been found more difficult to achieve in developing countries than in
developed countries (Lecraw 1983, Schaan and Beamish 1988). It
implies that the criteria of evaluating performance should be differ-
ent in developing countries.
This paper aims to examine the relationship among the perfor-
mance measurements including subjective and objective methods,
different approaches, and different parties’ viewpoints in IJVs, and the
impact of national culture. The specific aims of this study are as fol-
lows: (1) to consider the relationship between objective and subjec-
tive performance measures; (2) to examine the relationship between
different approaches; (3) to clarify the relationship between different
parties’ viewpoints and IJV performance; and (4) to examine the im-
pact of the national culture of the parent firms on performance. The
next section discusses the issues relating to IJV performance measure-
ment and develops the hypotheses. The following section describes
the research methods for the study. The fourth section presents the
findings and discussions. Conclusions are in the final section.
LITERaTURE REvIEw
Measuring performance has been an important issue in interna-
tional joint venture since performance difficulties affect the financial
structure of parent firms (Beamish 1985, Lee and Beamish 1995).
Numerous studies have been addressing this issue with different
criteria such as partner satisfaction, financial indicators, survival,
duration, instability, and stock-market reaction (e.g., Blodgett 1992,
Barkema and Vermeulen 1997, Glaister and Buckley 1998). How-
ever, the use of economic measures has limitations that may fail to
reflect a joint venture’s achievement of its long-term goals (Geringer
and Hebert 1991). The goal of this paper is to examine the relation-
ship among the subjective and objective measures, different parties’
point of view, and effect of national cultural on IJVs. In this study,
four approaches are introduced to measure performance: economic,
strategic, behavioral, and learning which have been examined in pre-
vious studies (Buchel et al. 1998, Glaister and Buckley 1999, Yan
2000, Buchel and Thuy 2001).
Measuring Performance Of Sino-Japanese Joint Ventures In China:
The Relationship Among Methods, Parties, Approaches, And Impact
Of National Culture
Lung-Tan Lu
Department of Management, Fo Guang University, Taiwan
absTRaCT
This study aims to explore the performance measurement of Sino-Japanese joint ventures (JVs) by linking the relationship among
subjective and objective methods, measure approaches, perspectives of parent firms and IJV general managers, and the impact
of national culture. Using a sample of 76 Sino-Japanese JVs, the findings are as follows: (1) foreign parents and JV general
managers evaluate JV performance using four approaches (i.e., economic, strategic, behavioral, and learning). (2) There are significant
correlations among the four approaches. (3) Learning approach is found significantly different between the Japanese parent firms and
JV general managers. (4) National culture has influence on JV performance.
Keywords: International Joint Venture, Performance, Culture
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