Foreign parent investment strategies and international joint venture performance: Chinese evidence.

摘要

The present research is designed to examine empirically the underlying relationship between a set of investment strategy variables of foreign parent firms and the multi-dimensional performance of international joint ventures (IJVs) within an integrated model. Considering the increasing importance of newly emerging market economies, most notably China, in the global integration of international business, that country is used as the analytical context for this research. The investment strategy variables investigated in this study include project-type selection, location selection, timing of investment, industry selection, sharing arrangement, partner selection and product diversification. In order to capture diverse strategic objectives of foreign parent firms and corresponding roles of IJVs, this research measures IJV performance along several dimensions, namely return on investment, asset turnover, domestic sales growth, risk reduction, and export growth. The research has a triple focus (i) multivariate and univariate effect of investment strategy variables on IJV performance; (ii) multivariate and univariate effect of interactions among investment strategy variables on IJV performance, and (iii) latent structure of investment strategy variables.;Cross-sectional data regarding financial and investment information for a sample of 101 IJVs operating in manufacturing industries from 1989 through 1991 in Jiangsu province, China, was obtained from the Jiangsu Provincial Commission of Foreign Economic Relations and Trade. The data concerning industry growth was computed based on figures provided by the China Statistical Yearbook. The major statistical approaches employed in the study include MANOVA, GLM, and factor analysis.;The results of this research reveal that (i) timing of investment, industry and local partner selection are critical to IJV's overall performance; (ii) split sharing arrangement, firm location, and local partner selection are essential to IJV's efficiency and risk reduction; (iii) product diversification and project and industry selection are crucial for IJV's local market expansion and export growth; (iv) the interactions between industry and timing, between sharing and project type, and between industry and product diversification are important for IJV's overall or unidimensional performance, and (v) factor analysis of investment strategy variables yielded four latent factors, namely how, why, when, and where. Each of these four factors explains about the same level of item-variance. This result confirms the importance and tenability of adding a timing dimension into Dunning's OLI paradigm.;This study makes both exploratory and confirmatory contributions to the IJV and FDI literature. It examines several investment strategy variables that have not previously been researched, at least empirically, and produces new evidence concerning some other investment strategy variables that have previously remained obscure mainly due to omission of interaction effects among investment strategy variables or failure to control relevant variables. The findings of this study have important managerial implications for international executives presently active in China as well as future investors there and beyond.