Outcomes of learning through JVs for local parent firms in transition economies: Evidence from Russiaby Irina Mihailova

Journal of World Business

About

Year
2015
DOI
10.1016/j.jwb.2014.04.004
Subject
Finance / Business and International Management / Marketing

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Journal of Wo jo u r nal h o mep age: w ww.e1. Introduction

Learning through Joint Ventures (JVs) in transition economies has become one of the central research areas in the last two decades (Child & Yan, 2003; Jiang & Li, 2008; Lyles & Salk, 1996).

The rationale behind this interest is a belief that JVs provide an excellent opportunity for local parent firms to access foreign firms’ capabilities and knowledge (Evangelista & Hau, 2009; Lane, Salk, &

Lyles, 2001; Liu, Ghauri, & Sinkovics, 2010). The need to acquire knowledge came about as a result of the transition from centrally planned to market economies. This transition put pressure on local firms to undergo profound organizational transformation and to learn new skills and approaches to doing business in order to become successful in market-based economy (Peng & Heath, 1996;

Roth & Kostova, 2003). In particular, local firms needed to obtain technological, managerial, and marketing capabilities to be able to meet customers’ requirements and to compete in market-based economic conditions (Meyer & Peng, 2005; Tsang, 2002). Thus, local firms were motivated to enter the JVs with foreign firms to learn such skills and knowledge (Anh, Baughn, Hang, & Neupert, 2006; Tsang, Nguyen, & Erramilli, 2004). However, we still know little about the performance implications of learning through JVs for the local parent firms. While the impact of JV learning on the performance of a JV as an entity has been studied (e.g. Child & Yan, 2003; Lyles & Salk, 1996; Zhan & Luo, 2008), I argue that it is important to examine how local JV parent firms in transition economies have benefited from JV learning in their own operations and how this learning has assisted the development of their competitive advantages outside JV boundaries. Furthermore, there is a need to develop appropriate measures to achieve this objective.

The literature review shows that there are measurements to assess JV learning outcomes for the JV parent firms from developed countries (e.g. Inkpen, 2005; Jiang & Li, 2008). However, I argue that they cannot be directly applied for understanding of implications of

JV learning for local parent firms in transition economies. This is because local firms in transition economies differ from developed countries firms in their level of knowledge and capabilities, technological sophistication, and other resources required for building their competitive advantages (Meyer & Peng, 2005; Wright,

Hoskisson, Filatotchev, & Buck, 1998). The difference in resources and strategic goals between local firms in transition economies and developed countries firms also reflects their incentives for cooperation in JVs (Hitt, Dacin, Levitas, Arregle, & Bozra, 2000).

Yet, the literature still lacks a framework for how to assess the performance outcomes of JV learning for local parent firms in transition economies and in this research I aim to fill this gap.

I develop a comprehensive set of measurements to evaluate the performance implications of local JV parents firms attributable to

JV learning. Due to the fact that JV literature alone does not offer sufficient tools for this evaluation, I integrate relevant concepts * Tel.: +358 40 353 8351; fax: +358 9431 38 880.

E-mail address: irina.mihailova@aalto.fi 1 Irina Mihailova has previously published under her former surname

Jormanainen. http://dx.doi.org/10.1016/j.jwb.2014.04.004 1090-9516/ 2014 Elsevier Inc. All rights reserved.Outcomes of learning through JVs for lo economies: Evidence from Russia

Irina Mihailova 1,*

Department of Management and International Business, Aalto University School of Bus

A R T I C L E I N F O

Article history:

Available online xxx

Keywords:

JV parent

Learning measurements

Capabilities

Restructuring

Russia

A B S T R A C T

The outcomes of learning learning for JV parent firms phase approach for the ass from innovation and stra evaluated at operational le capabilities. At the second modernization, restructur measurements in an exploPlease cite this article in press as: Mihailova, I. Outcomes of learning th from Russia. Journal of World Business (2014), http://dx.doi.org/10.1al parent firms in transition s. P.O. Box 21230, FI-00076 AALTO, Finland r JV performance have been studied extensively. However, benefits of ransition economies are not well understood. In this paper I develop a twoent of learning outcomes for local JV parent firms by integrating concepts studies. I argue that at the first phase learning outcomes should be as changes in functional types of technological capabilities and managerial ase these changes have to be linked to strategic level outcomes for the and long-term competitiveness. I illustrate the applicability of these ive case study of Russian JV parent firms.  2014 Elsevier Inc. All rights reserved. rld Business l s evier . co m/lo c ate / jwbrough JVs for local parent firms in transition economies: Evidence 016/j.jwb.2014.04.004

I. Mihailova / Journal of World Business xxx (2014) xxx–xxx2

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WORBUS-683; No. of Pages 14from the innovation and strategy in transition economies studies with those from JV learning area. I suggest that implications of learning should be assessed in two phases: first at the operational level, and then at the strategic level. I propose that at the operational level changes should be measured in specific functional types of technological capabilities and managerial capabilities. I use the classification of technological capabilities from the innovation studies that specifies three functional types of technological capabilities: investment, production and linkages (Bell & Pavitt, 1995; Lall, 1992). Also, I adopt the view that managerial capabilities can be reflected in managerial values, systems and cooperation capabilities (Danis, 2003; Gulati, Lavie, &

Singh, 2009). In the second phase of assessment of learning outcomes, I suggest that the impact of changes in operational capabilities should be linked to the strategic development in terms of changes in processes of modernization and restructuring.