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.
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*Shige Makino (Ph.D., University of Western Ontario) is Assistant Professor of Management at the Chinese University of Hong Kong. His current research interests focus on international joint ventures with multinational partners and evolutionary development of Asian MNEs.
**Andrew Delios is a Doctoral Candidate at the Richard Ivey School of Business, University of Western Ontario. His current research interests focus on theories of FDI and on modes of entry used by manufacturing and service firms.
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Makino, S., Delios, A. Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia. J Int Bus Stud 27, 905–927 (1996). https://doi.org/10.1057/palgrave.jibs.8490156
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DOI: https://doi.org/10.1057/palgrave.jibs.8490156