" Academy o/ Managewenl Executive. 1999, Vol. 13. No.

Knowledge transfer in
international joint ventures in
transitional economies: The
China experience
Sfeven X. Si and Garry D. Bruton

Executive Overview
China is one of the fastest growing economies in the world. A major factor in the
country's economic development has been the large number of international joint
ventures established within China in recent years. Although China is now the world's
most active joint venture market, satisfaction with the performance of many international
joint ventures in China is declining. This can be traced in part to the inability of many
firms to properly assess their knowledge acquisition goals within the joint venture.
Western partners' new information needs differ substantially from those of their Chinese
counterparts. As a result, the joint venture partners may judge the success of their venture
from vastly different points of reference. These differing goals do not automatically lead
to joint venture dissatisfaction, nor do the differences necessarily need to be eliminated.
Rather, the characteristics and needs of both the joint venture itself and of each partner
should be studied in tandem to determine when a joint venture should devote
consequential resources to meeting these knowledge acquisition goals, and when such
allocation is likely to be unproductive. The application of such a contingency model to
knowledge acquisition ultimately will help increase the satisfaction among international
joint venture participants in China.

International joint ventures are key to many firms'
international strategy, and this is particularly so in
China. The economic growth rate in China has
been over 8 percent per year since 1979—one of the
fastest in the world, and one that is expected to
continue in the future.' Because China is also
home to 25 percent of the world's population, many
Western firms view the country as a prime target
market. Although China is the world's most active
joint venture market,^ dissatisfaction with the per-
formance of joint ventures in China is beginning to
rise.
Profits are generally the focus of Western dissat-
isfaction with Sino-Western joint ventures, but this
may be merely an associated outcome. The lack of
understanding of each partner's knowledge needs
may be the root cause of international joint ven-
tures' performance problems within the country.
The investigation of international joint ventures in
83
established economies has shown that one of the
motivating factors in establishing the venture, and
one of the criteria by which its success is judged, is
the knowledge transfer between the parties and
the synergy this brings to the joint venture.^
Such knowledge transfer is particularly important
in China as Western firms seek to leam about the
Chinese market and how to compete in it, while
Chinese firms desire knowledge about relevant new
technologies or management skills. If the under-
standing of China is improved, and the parties
achieve better cooperation and communication from
better knowledge acquisition, then the resulting fi-
nancial performance of these international joint ven-
tures will improve as well.
But firms should not institute rigidly defined
knowledge acquisition goals without first evaluat-
ing whether the benefits outweigh the costs, which
can be great in both time and resources.
84 Academy of Management Executive
The Chinese Environment
Before 1979, China's economy was an orthodox Com-
munist system with strong central control of nearly
all economic decision making. Since then, the coun-
try has sought to move toward a market economy
and is now frequently referred to as a socialist econ-
omy with market characteristics. This rapid transfor-
mation has helped feed Chinese firms' hunger for
knowledge about new technologies and manage-
ment skills, inaccessible before the economic liber-
alization. For Western firms, China is a far more
complex environment than encountered elsewhere
in the world, with a potentially confusing montage of
business classes within any given industry, each
regulated by different laws.
For Western firms, China is a far more
complex environment than encountered
elsewhere in the world, with a
potentially confusing montage of
business classes within any given
industry, each regulated by
different laws.
There are the large state businesses that most
Westerners commonly associate with a Commu-
nist government. However, a segment of the econ-
omy that has greater industrial output but is not
widely understood in the West comprises village
and township enterprises that to a large degree
are independent of the central government.*
Not only are there different laws for an interna-
tional joint venture than for the domestic partner
alone, but there may also be different laws de-
pending on whether the Chinese partner is a state
business or a village or township enterprise. Re-
quirements governing the joint venture also vary
depending on who has control and what assets are
provided by whom.
China's legal system is not a consistently applied
system of recognized rights and wrongs, but rather a
series of broad guidelines that give an individual
judge leeway to determine rights and wrongs.^ Fur-
thermore, a provincial govemment may write regu-
lations prohibiting the sale of a product not produced
in its own region. Thus, the Western joint venture
partner is highly likely to place greater emphasis on
knowledge acquisition in China than would be the
case in other business environments.
Despite their explosive growth, knowledge
about joint ventures in China remains limited.^
The 1979 Law on Joint Ventures made such alli-
ances the principal means for outsiders to enter
February
the Chinese market.^ Since 1989, the year of the
Tiananmen Square incident, the number of joint
ventures approved has increased by 500 percent.^
Yet dissatisfaction with their performance is com-
mon among non-Chinese partners, regardless of
the measurement criteria used.^
Knowledge Acquisition
The goals of joint ventures go beyond mere eco-
nomic benefits. Knowledge, its management,'° and
its acquisition are critical issues facing senior
managers." Firms lean heavily on their past joint
venture experiences and use them to direct present
and future actions, building on their understand-
ing of markets, technologies, or management
styles each time they ally with another firm.
Knowledge acquisition and learning are critical
to international joint ventures in China,'^ but the
goals of individual parties to such ventures have
not been established.'^ Nor has the assumption
that the goals of the parties differ been objectively
determined.'''
Through a series of in-depth, structured interviews
with five focus groups, the 10 major goals for the
parties to intemational joint ventures in China were
established. (Appendix A). The ten resulting knowl-
edge goals are presented in Table 1 as part of three
broad categories that typically summarize knowl-
edge acquisition in mature economies; 1) knowledge
of governmental issues; 2) knowledge of culture; and
3) knowledge of market characteristics.'5
To better understand how the parties to a joint
venture may rate the importance of these goals
quite differently, 125 randomly chosen Sino-West-
ern joint ventures, each with a minimum of 50 em-
ployees and each in business for over one year,
were surveyed in Shanghai.'^ One Chinese and
one Western manager from each joint venture were
Table 1
Rankings of Knowledge Acquisition Goals of
International Joint Ventures in China
Knowledge of Governmental Issues
Understanding Government Behavior
Learning National Policies, Rules & Relevant Laws
Understanding the Partner's Economic System
Knowledge of Culture
Learning More About the Partner Firm's National Culture
Learning the Negotiation Styles of the Partner's Nation
Gaining Knowledge of New Managerial Types & Styles
Knowledge of Market
Gaining Knowledge of Partner's Market Characteristics
Gaining Understanding of Labor Resources
Gaining Understanding of Capital Resources
Learning New Technologies
1999 Si and Btuton
invited to respond to the survey. Responses from 78
Chinese and 69 Western managers were re-
ceived.'^ Fifty-two percent of these responses came
from joint venture presidents and vice presidents,
while the remaining 48 percent were from mid
level managers.18 The results of the survey are
summarized in Appendix B.
The interviews demonstrated that the goal empha-
sis of the two groups was substantially different. Of
the ten knowledge goals presented, the Chinese and
Westem partners placed significantly different pri-
orities on nine. Chinese managers focused on those
features that they have not currently mastered, such
as technology, management skills and capital un-
derstanding. Westem managers focused on their
own radically different gaps—understanding the lo-
cal market, govemment policy, and the political sys-
tem. These results are very like those expected from
mature economies.
Influences on Knowledge Goals
The presence of different classes of businesses
within the same industry, a legal system radically
different from those in most Western countries, and
the strong influence of guanxi (personal relation-
ships),'^ all influence joint ventures in China. A
firm with prior experience in China may have built
relationships and intemal knowledge and can
therefore overcome these problems without devot-
ing new resources.
When both the Chinese and the Westem partner
are also from the same industry, there is greater
potential and desire to obtain knowledge from each
other. But the union of joint venture partners from
different industries is also quite common in China.
Central or provincial govemments may strongly en-
courage a joint venture between unrelated Chinese
and Westem businesses. The Chinese firm may
bring certain critical resources to the table, such as
access to raw materials. However, in cases where
there is little commonality between the partners,
there is less potential for, or benefit from, expending
resources to meet knowledge acquisition goals.
The technical nature of the joint venture also af-
fects its knowledge goals. If firms employ high tech-
nology in their production processes, communication
between the parties is critical to the efficient func-
tioning of the organization. The machinery in a high-
tech environment is complex, and without good com-
munication, errors in production and maintenance
can occur. The designated market for the joint ven-
ture's output is also critical. If the product is designed
strictly for export, the need for meeting knowledge
acquisition goals is somewhat less because the po-
tential need for govemment support is limited. Such
85
joint ventures employ Chinese citizens, typically at
high wages, and do not compete with local firms.
Consequently the Westem firm needs to leam less
from its Chinese partner about the local government,
regulations, and culture.
The need for government support is greater
when the output of the joint venture is sold within
China. In this case, the joint venture competes with
local firms and could potentially put them out of
business. Thus, it is critical to interact smoothly
with local regulators and government officials,
whose protection from the vagaries of Chinese law
and regulation is important. Reliance on the local
partner becomes even more important when the
venture sells its output to government entities
rather than the general public. In these situations
a clear understanding of the local circumstances,
culture, and politics is important to success, and
the role of govemment officials looms larger.
These contingency concepts are summarized in Fig-
ure 1. A joint venture entity needs to understand the
dimensions of its own as well as its individual part-
ners' knowledge acquisition goals. Utilizing the model,
the firm can determine how much effort should be de-
voted to meeting these often-unaligned goals.
Three Categories of Knowledge Goals
The managers who rated the importance of the
various knowledge issues were also queried about
their firms' experiences in knowledge acquisition.
In addition, they were asked about their satisfac-
tion with the joint venture's performance and
asked to rate it on a seven-point scale. Combining
this performance information and the model dis-
cussed above, three categories of firms became
evident. The first category comprises intemational
joint ventures where the knowledge goals of both
parties were considered by the joint venture but
deduced to be not critical to the success of the
venture—approximately 20 percent of the sample.
These joint venture parties may have had knowl-
edge desires, but devoting extensive time and re-
sources to insure that they were met was not a
priority for success. Joint Venture A is an example.
The second category consists of joint ventures
where neither extensive time nor resources were ex-
pended to consider the knowledge goals of the par-
ties when firms designed and evaluated their suc-
cess strategies. However, for these ventures the
knowledge goals were critical to their ultimate suc-
cess, and ignoring such needs led to substandard
performance. These firms represented about 50 per-
cent of the sample. Joint Venture B is an example.
Finally, the last category consists of firms where
the knowledge goals of both parties were integral
86 Academy ot Management Executive
China
Knowledge
Strategic Evaluate Knowledge Goals
Performance and Their Impact on Joint
Gap Venture Success
Technology
Utilized
FIGURE 1
Knowledge Model to Guide International Joint Venture Evaluation
throughout the joint venture process. These joint
ventures were found to have prospered, and they
represent about 30 percent of this sample. Joint
Venture C is an example.
Fast Food Joint Venture: Limited Emphasis On
Knowledge Goals
Joint Venture A's Westem partner is a U.S. fast food
company that has been active in China for over
five years and has locations throughout the coun-
try. This venture is in Shanghai, where 50 outlets
have been in operation for over three years. The
required labor skills are minimal and an abun-
dance of qualified workers is available. The firm
has made only minimal efforts to change its U.S.
menu. Thus, beyond the knowledge inherited from
the parent firm, there is no significant information
about either the labor market or cultural issues
that will enhance the U.S. firm's position.
The Chinese partner is a large state company from
outside the food industry that is well connected to
local govemment. Govemment access was what the
Westem firm most desired from its Chinese partner.
The Chinese partner's being outside the food indus-
try limits the market knowledge the U.S. firm can
February
Limited
Resources
Devoted to
Partner Knowledge
Characteristics . Acquisition
Goals
Less Important
Critical
Incorporate
Knowledge
Acquisition Goals
Market for Through
Output Investment of
Resources for
Joint Venture
Success
glean from it, as well as the extent to which the U.S.
firm can provide benefit to its partner.
The food industry uses low technology, so the
level of employee training and skills required is
minimal. Since the firm's menu is essentially a
replication of its U.S. offerings, menu planning will
not substantially benefit the Chinese partner.
The firm sells its product directly to consumers,
and there is no direct dealing with the government
to consummate sales. The Western firm therefore
has limited needs for understanding the Chinese
governmental system.
That the knowledge acquisition goals of both the
Chinese and the Western party are not critical to
the operations of the venture is demonstrated by
the U.S. company president's comment: "Our prod-
uct is easily identified by the customer. Addition-
ally, while we (both) needed to know about diverse
cultures, in fact, China understood our culture well
because they saw a lot of it on TV."
Manufacturing Joint Venture: Knowledge Goals
Important But Not Emphasized
Joint Venture B's Western partner is a European
machinery manufacturer that makes machinery
1999 Si and Bruton
for the food, rubber, and chemical industries. The
joint venture is approximately three years old
and is the European partner's first joint venture
in China and one of its first in a transitional
economy. The firm has extensive experience in
international business, particularly in Europe,
but lacks knowledge about Chinese governmen-
tal affairs, culture, and market. At this stage, it
believes that its other international experience
will overcome these shortcomings. However, the
joint venture has been troubled by misunder-
standings between the partners and the govern-
ment regulators of the joint venture.
The Chinese joint venture partner is a large state
machinery manufacturer that wants to learn about
operational issues to increase its own interna-
tional competitiveness. Because such market
knowledge is neither publicly acknowledged nor
readily available, the European firm frequently
feels its Chinese joint venture partner is trying to
obtain company secrets. In turn, the Chinese firm
feels the European firm is not forthcoming.
The machinery manufacturing industry relies on
intensive technology in its manufacturing process,
as does this joint venture. In such an environment,
accurate and complete communication is critical.
This requires establishing a high level of trust and
a good working relationship, something difficult to
accomplish when the partners have unstated
knowledge goals that are directing their activities.
Additionally, knowledge shortcomings in areas
such as governmental affairs or culture can actu-
ally impede accurate communication. These fac-
tors have contributed to the lackluster success of
this joint venture.
There is a desire to sell part of the output of
this machinery joint venture within China. How-
ever, most firms that would buy such machinery
are large government businesses rather than in-
dividuals, and they purchase what the govern-
ment encourages them to buy. An understanding
of the local policies and how to encourage such
purchases through governmental channels, offi-
cial and unofficial, is critical. Effective relation-
ships with the government officials who might
encourage these purchases have yet to be devel-
oped.
Joint Venture B has not emphasized knowledge
acquisition goals to any substantial degree ei-
ther in establishing the joint venture or in eval-
uating its success. Instead, it has focused on the
quantifiable issues of production levels and
sales. The European president of the joint ven-
ture has proclaimed, "We do not have time to
wait until we know such issues (knowledge
goals). We came here to utilize a technological
87
advantage." He implied that his technological
advantage would be lost if the firm took the time
to emphasize such knowledge goals, since they
require considerable time and effort to develop.
The end result has been that the joint venture's
performance suffered, and the rating by the joint
venture executive on the seven-point scale was
at the low end.
Communications Joint Venture: Knowledge
Acquisition is Recognized and Reflected In Firm
Performance
Joint Venture C's Western partner is a German firm
that produces communications equipment, is a
very active international firm with several joint
ventures across China, and has been active in the
China market for over ten years. Despite this
length of time, or perhaps because of it, the firm
continues to place strong emphasis on governmen-
tal affairs and market knowledge. The firm feels
such issues are particularly important in a transi-
tional economy. Thus, the firm actively states its
knowledge needs to its partner and enquires di-
rectly as to its partner's needs. The joint venture
records these issues and they become part of the
firm's performance evaluation process.
The Chinese partner is a large state firm that
produces electronics. For issues such as quality
control and assembly, the firm's partner operates
in a closely related industry that generates the
Chinese partner's own knowledge acquisition
goals. The German parent does not find its part-
ner's wishes to increase its own international com-
petitive posture a threat; instead, this is viewed as
creating a potentially stronger partner. The firm
takes a long-term view of the relationship with the
Chinese firm, thus it is very selective about choos-
ing its partners. Once selected, the relationship is
operated with long-term expectations. Accord-
ingly, there is a relatively free flow of information
between the partners, and the latest technology is
employed in the joint venture. Consistent with this
outlook, when the international joint venture holds
its frequent training sessions, it invites not only
the employees of the joint venture, but also em-
ployees of the Chinese parent.
Communications equipment is technology inten-
sive, and there is a strong need for good commu-
nication and working relationships between part-
ners because of the faster pace of change and
greater complexity.^" Partners must communicate
fully and work together toward all of their goals if
they are to avoid conflict. Additionally, this joint
venture is aided by the continued escalation of the
technological level of the operation. A local part-
 Academy oi Management Executive
ner may leave a joint venture once it has learned
all it can from the international partner, but if the
technology employed is at the cutting edge, there
is less incentive to leave.
This joint venture produces communication
equipment for both domestic use and intemational
export. Since the communications industry is still
highly regulated in China, current and accurate
knowledge about government rules, policies, and
politics is critical. The Western partner actively
seeks to work with its Chinese partner to both meet
and work with these government entities.
Both sides of this intemational joint venture have
supported knowledge acquisition goals throughout
the process. This has helped to foster the joint ven-
ture's success. Although this success has yet to pro-
duce immediate financial retums, a platform for
long-term strategic success has been established. Its
German president admitted, "We have not been prof-
itable in the past several years, but strategically we
are successful as we build for the future."
Putting Knowledge Acquisition in Perspective
International joint ventures are not all the same.
There are situations where the joint venture is es-
tablished for no reason other than to obtain knowl-
edge or information from the other party. However,
most firms enter into a joint venture where knowl-
edge acquisition is one part of a complex set of
goals. In an international Western-Chinese joint
venture, once the various goals are identified, the
international firm must determine how significant
those goals are to the success of the venture and
must act accordingly.
If managers are not satisfied with a joint ven-
ture's performance, they can utilize the proposed
model to visualize how knowledge acquisition
goals may be affecting that dissatisfaction. The
model aids managers by helping them to think
through the unique characteristics of the intema-
tional joint venture and the actions that may be
critical to its success. If it is determined that the
Sino-Western joint venture should devote time and
resources to meeting the partners' knowledge ac-
quisition goals, there are a variety of means to go
about this. As noted in Case C, some items are as
simple as clearly writing down the basic issues
that the partners want to learn and incorporating
them into the firm's performance evaluation. Joint
Venture C employed managerial training as one
key element in meeting such goals.
Organizational learning can be far more com-
plex if the basic nature of the organization must be
altered.^' While a complete review of such organ-
izational leaming is beyond the scope of this arti-
February
cle, executives will need to investigate this topic
further if they determine the contingency variables
in their given situation encourage such knowledge
acquisition. The China market, as in most transi-
tional economies, has tremendous potential for
Westem firms. However, the Westem firms must
think through their own and their Chinese part-
ners' knowledge needs.
The China market, as in most transitional
economies, has tremendous potential for
Western firms. However, the Western
firms must think through their own and
their Chinese partners' knowledge needs.
They cannot rely simply on measurable issues
such as output and sales without first determining if
those variables are most appropriate for the given
firm. If they do not analyze and think through these
issues, the joint venture has the potential to be part
of the approximately 50 percent of intemational joint
ventures that are dissatisfied with their perfor-
mance. This advice is offered specifically for manag-
ers active in China. Yet it can be translated to other
transitional economies where the local understand-
ing and knowledge of the Westem partner firm
needs to be improved and the special knowledge
needs of the domestic partner recognized.
Appendix A
What Are the Goals in a Sino-Western Venture?
To generate a list of intemational joint venture goals,
five focus groups were conducted with ten partici-
pants each. The participants of the focus groups each
had Sino-Western intemational joint venture experi-
ence. The focus groups were conducted in conjunc-
tion with the Shanghai Management Training Cen-
ter. A large number of the joint ventures operating in
China were formed by firms in Hong Kong and Tai-
wan. It can be argued that these ventures represent
businesses from "greater China" rather than intema-
tional joint ventures, because of the language and
cultural similarities. Therefore, the focus group and
later survey sample included only firms from North
America and Europe.
The five separate focus groups were conducted
over a three-month period and produced a relatively
large sample for China research—50 participants.
Participants first discussed major criteria for good
intemational joint venture knowledge transfer and
acquisition. The subjects were then asked to list
items and to rate them on a seven-point scale accord-
1999
ing to their importance for international joint ven-
tures. Each session was about an hour long and the
discussion among participants was audiotaped in
order to obtain the full richness of the information
provided through later observation and analysis.
In addition, the existing literature, not only in the
West but also in China, was reviewed. Finally, a list
of 27 potential goals was generated from these two
distinct sets of information. That list of 27 potential
goals was presented to 51 Sino-Westem joint venture
experts (both academicians and practitioners), 28
from China and 23 from Westem nations. These ex-
perts were interviewed independently about the
goals and asked to rate them from most important to
least important. From these rankings, a smaller list
of ten of the most important goals was generated.
This list appears in Table 1. (Because of the unequal
size of the Chinese and Westem respondents it was
decided that simply totaling the various rankings
was not appropriate. Additionally, since some of the
variables had overlap in potential meaning, and ex-
ploratory factor analysis was utilized. Those factors
with loadings of +/- .50 or greater were employed.
The names reflected in Table 1 reflect the titles given
to those loadings.)
Appendix B
Importance of Knowledge Acquisition Goals
(Scale 1 to 5 with 1 for least important)
Means oi
Importance
China
n = 78
Governmental
Understanding Government 1.8
Behavior
Learning National Policies, Rules & 2.09
Relevant Laws
Understanding the Partner's 1.13
Economic System
Culture
Learning More About the Partner 3.91
Firm's National Culture
Learning the Negotiation Styles of 2.01
the Partner's Nation
Gaining Knowledge of New 3.95
Managerial Types & Styles
Market
Gaining Knowledge of Partner's 2.87
Market Characteristics
Gaining Understanding of Labor 0.85
Resources
Gaining Understanding of Capital 4.08
Resources
Learning New Technologies 4.51
* Statistically significant at p < .01
Si and Bruton 89
Endnotes
' Institute ot Economic Review, (number 155, February 1996,
pp. 56-80) The rise of China as an Economic Power.
^ Paul Beamish writing in the Journal ol International Mar-
keting (1993, 1(2): 29-48) The characteristics of joint ventures in
the People's Republic of China.
' There are many different examinations of joint ventures
and their motivating rationale. For example, K. Harrigan in her
1985 book (Strategies for Joint Ventures, Lexington, Mass. Lex-
ington Books) and later her writing in the Strategic Manage-
ment Journal (1988, Joint ventures and competitive strategy. 9(2):
141-158) provides excellent insight. Similarly, Kogut's 1988 arti-
cle in the Strategic Management Journal (Joint ventures: Theo-
retical and empirical perspective, 9:319-332) and F. J. Contractor
and P. Lorange's article in the book they edited Cooperative
Strategy in International Business (1988, Lexington Mass., Lex-
ington Books) also provide useful insight. However, while these
various writings use different terms they all indicate that while
economic motives may still predominate there are other mo-
tives that may be as strong including knowledge acquisition.
* The information on industrial output was drawn from an
excellent article on the Chinese economy by C. Goodhart and C.
Xu in the National, The characteristics of joint ventures in the
People's Republic of China, 1996.
^ For an excellent review of the historical evolution of the
legal system in China see the widely read Chinese history book
by John King Fairbank (1992) China: A New History.
^ Most of the investigations of joint ventures in China have
typically examined the macro-economic variables which im-
pact that decision of descriptive examinations of joint ventures
in China. A. Yan and B. Gray in their 1994 Academy of Manage-
ment Journal article (Bargaining power, management control,
and performance in United States-China joint ventures: A com-
parative case study, 37:1478-1517) confirm this point of view
with their good summary of the articles on joint ventures in
China.
' An excellent book reviewing the different aspects of invest-
ing in China including joint ventures and direct investment is
Investing in China: Ten Years ol the Open Door Policy by Rich-
Western ard Pomfret (1991), New York: HarvesterAVheatsheaf.
n = 69 ^ One of the unique characteristics of Chinese joint ventures
is that far more are approved than actually reach realization.
For example, in 1995 there were over 27,000 joint ventures ap-
4.15 proved by the government but only 17,000 in operation.
^ Paul W. Beamish writing in Journal ol International Market-
4.07 ing (1993, vol. 1, no. 2, pp. 29-48) The characteristics o£ joint
ventures in the People's Republic of China.
3.87 '° C. K. Prahalad and Gary Hamel discussed the need to
cultivate a better understanding of knowledge management as
part of their overview of the needs for the strategic manage-
4.02 ment discipline to have an improved understanding of business
(1994, Strategy as a field of study: Why search for a new para-
3.91 digm? Strategic Management Journal, 15: 5-16).
" D. R. Webster writing in Business Horizons (1989, Interna-
2.72 tional joint ventures with Pacific Rim partners, 32(2): 65-71)
actually argues that such knowledge may be one of the most
critical items to the joint venture.
4.08 '^Much of what has been written about joint ventures in
China has sought to address the learning needs of managers.
4.16 For example, articles by authors such as M. Vonglinow and
M. B. Teagarden (The transfer of human resource management
0.87 technology in Sino-U.S. cooperative ventures: problems and
solutions. Human Resource Management, 1988, 27(2): 201-229)
1.01 and W. H. Davidson writing in the Calilornia Management Re-
view (Creating and managing joint ventures in China, 1987,
27(4): 77-94) seek to provide managers basic information about
90 Academy ot Management Executive
differences in management styles and activities within Chi-
nese joint ventures as compared to other Western firms.
'•^ A. Yan and B. Gray, writing in the Academy ot Manage-
ment Journal (1994, 37: 1478-1517) Bargaining power, manage-
ment, control, and performance in United States-China joint
venture: A comparative study, indicate from their case studies
that there are differences in motivating goals for establishing
the joint ventures for the U.S. and Chinese partners. However,
while some of these goals clearly involve knowledge acquisi-
tion, they do not address specifically what the knowledge ac-
quisition goals of the two groups might be.
'•" W. H. Newman states there will be such divergence
in goals writing in the Academy ot Management Executive
(Focused joint ventures in transforming economies, 6(1): 67-75)
as he discusses successful joint ventures in China.
'^ The literature on organizational knowledge acquisition in
joint ventures from which these three categories were distilled
includes, in addition to the previously cited work on joint ven-
tures, G. Hamel's 1991 article in the Strategic Management
Journal (Competition for competence and interpartner learning
within international strategic alliances, 12 (special issue): 83-
104); and A. Parkhe's 1991 article in the Journal ot International
Business Studies (Interfirm diversity, organizational learning,
and longevity in global strategic alliances, 22: 579-602).
'^ These firms represented a wide range of industries and
various levels of Western ownership.
'^ Both Chinese and English versions of the surveys were
sent to the firm. To ensure that the two forms of the surveys were
compatible the Chinese version was translated back into En-
glish by different scholars than had conducted the original
translation to check for translation inconsistencies. The English
version was similarly translated into Chinese and back into
English. Additionally, there is a cultural bias of East-Asian
cultures to give even rather than odd number responses. There-
fore, only even response numbers were used in the survey.
" The response rate was partially supported by the local
government response to the survey. The anonymous nature of
the survey was guaranteed to ensure that there was accurate
response to the survey.
February
'^ There are a number of good articles available to readers
which discuss the concept of guanxi such as E. W. K. Tsang
writing in the Academy ol Management Executive (1998, vol.
12(2): pp. 64-73) Can guanxi be a source of sustained competi-
tive advantage for doing business in China.
^° K. Singh writing in the Academy ot Management Journal
(1997, 40: 239-367, The impact of technological complexity and
interfirm cooperation on business survival) argues that busi-
ness alliances can act to mitigate the liability of newness in
high technology in high complexity technology based indus-
tries.
^' For an excellent review of the organizational learning the-
ories as they apply to organizational change of each writer, see
A. C. Edmondson, (1996) writing in Human Relations 49: 571-625,
Three faces of Eden: The persistence of competing theories and
multiple diagnoses in organizational intervention research.
About the Authors
Steven X. Si is an assistant professor of international business/
management in the Department of Management, Concordia
University. Professor Si received his PhD in strategic manage-
ment from the Washington State University in 1996. He has
published articles in peer reviewed academic journals such as
JnternafionaJ Journal ot Organizational Analysis. He has also
presented papers in national and international conferences,
including Academy of Management and Academy of Interna-
tional Business. His research interests include international
business issues, and the management of international joint
ventures and alliances.
Garry D. Bruton is an assistant professor of management at the
M. J. Neeley School of Business, Texas Christian University,
specializing in entrepreneurship and strategic management.
His research interests include high technology entrepreneur-
ship, private equity, and international business. His research
has appeared in the Academy ot Management Journal, Acad-
emy ot Management Executive, and the Journal ot Business
Venturing, among other publications.