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THE ROAD TO SUCCESS:A RESOURCE-BASED VIEW OF JOINT VENTURE EVOLUTION IN CHINA'S AUTO INDUSTRY

By Qingjiu Tom Tao

Abstract

In emerging markets, joint venture is a dominant form of competition for multinational corporations. Drawing from the resource-based view of the firm and evolutionary perspective, I developed a theoretical framework that synthesizes our knowledge regarding timing of joint venture formation, initial resource commitment and resource development beyond formation to fully understand the path of joint venture implementation and its economic impact on sustainable competitive advantage. Life course data for 439 joint ventures in the Chinese auto industry (1983-2002) form a cohort-sequential longitudinal dataset. Employing Hierarchical Linear Modeling (HLM) allows me to isolate the economic consequences and developmental trend of the main and interaction effects of entry timing, initial resource commitment and resource development on joint venture performance over time. The results of the study indicate that: 1). The sustainability of early mover advantage depends not only on the initial resource commitment, but also the effort in resource development over time. 2). Timing alone is significant in determining initial performance, but is not significant for the long-term success. 3). Early movers with high initial resource commitment are more likely to succeed in the long run but may take some time to achieve profitability. This study empirically explored the dynamics of resource accumulation and its impact on intra-firm performance variation through its life course and inter-firm performance variation overtime by integrating the resource-based view and entry order effect research. The results can help to reconcile the long time equivocal findings in entry order effect research. It can also provide a valuable contribution to the development of a dynamic resource base theory of the firm through the longitudinal analysis of IJVs life course development paths. Methodologically, it is one of the first attempts to introduce HLM to international joint venture research where the important issue of parameter variation across firm or over time has not been effectively addressed. Furthermore, the results identified different pathways to success through the use of different entry strategies and advanced our knowledge of international joint venture operations at and beyond the formation stage

Year: 2004
OAI identifier: oai:d-scholarship.pitt.edu:10448
Provided by: D-Scholarship@Pitt

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