Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia

Shige Makino and Andrew Delios
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Andrew Delios: University of Western Ontario

Journal of International Business Studies, 1996, vol. 27, issue 5, 905-927

Abstract: Foreign firms in host country environments frequently face location-based disadvantages. This study proposes three means (channels) of overcoming local knowledge disadvantages. Based on a sample of 558 Japanese joint ventures (JVs) located in Southeast and East Asia, we find that partnering with local firms (the first channel) can be a primary strategy for accessing local knowledge and improving JV performance. JV experience in the host country (the second channel) also mitigates local knowledge disadvantages and leads to increased JV performance. The third channel, the foreign parent's host country experience, leads to increased performance in the absence of a local partner. However, when a JV is formed with a local partner, increased parent experience in the host country leads to decreased performance suggesting that the need for a local partner declines as parent experience in a host country increases.© 1996 JIBS. Journal of International Business Studies (1996) 27, 905–927

Date: 1996
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