Joint Ventures in China: A Comparative Study of Japanese, Korean, and U.S. Partners

Abstract

The authors develop a model to examine systematically the relationship among motivation, control, and performance of joint ventures in China. Motivations are categorized into three dimensions: efficiency, competition, and learning. Motivations determine the level of control in joint ventures, and that level affects the joint venture's performance. The authors collected data from Japanese, Korean, and U.S. partners of joint ventures in China. They use structural equation modeling to test the model and examine cross-national differences using a multigroup comparison method. The results suggest a complex relationship among motivation, control, and performance. More control over joint ventures in China is beneficial to foreign partners, but the ability to exert control is influenced by firms’ strategic intentions and familiarity with the local culture and market. Foreign partners that have such familiarity can exert considerable control over joint ventures and still obtain local knowledge. Foreign partners that want to enhance competitiveness can apply their advanced skills and technology in research and development, production, and management to exert more control over these functional areas.