R&D intensity and international joint venture performance in an emerging market: Moderating effects of market focus and ownership structure

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 hazard 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. © 2007 Academy of International Business All rights reserved.