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02-09-2015 | Research Paper

How Existing Organizational Practices Affect the Transfer of Practices to International Joint Ventures

Author: Eric W. K. Tsang

Published in: Management International Review | Issue 4/2016

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Abstract

This study examines whether and how far the existence of prior organizational practices affects the transfer of new practices in the context of international joint ventures. Based on 324 pairs of survey responses collected from joint ventures set up by either Hong Kong or Singapore companies in mainland China, the results indicate that similarity between new and existing practices decreases while entrenchment of existing practices increases the difficulty of transfer. These two effects are moderated by the ownership—Chinese versus foreign—of existing practices. Transferring new practices that substitute for Chinese practices is more difficult than transferring practices that substitute for foreign practices or than transferring brand new practices.

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The main difference between organizational learning and unlearning is that the former emphasizes the acquisition of new knowledge whereas the latter the discarding of existing knowledge (Tsang and Zahra 2008).

Although some of the questionnaire items for the current study were adapted from Szulanski (1996), the two studies have some significant differences. For example, Szulanski’s study examined the inter-unit transfer of practices within large Western corporations and covered all the four stages of a transfer process: initiation, implementation, ramp-up, and integration. In contrast this study investigated the transfer of practices to international joint ventures in China and focused mostly on the difficulties encountered by the foreign partner during the implementation stage, which begins with the foreign partner’s decision to proceed with the transfer and ends when the joint venture begins using the transferred practice (Szulanski 1996).

I did not enter the main effect term of similarity because the three terms—similarity, replacing foreign practice x similarity, and replacing Chinese practice × similarity—are not linearly independent; the first term is the sum of the other two. A similar concern applies to entrenchment.

Here a brownfield investment refers to “a foreign acquisition undertaken as part of the establishment of a local operation. From the outset, its resources and capabilities are primarily provided by the investor, replacing most resources and capabilities of the acquired firm” (Meyer and Estrin 2001, p. 577). An acquisition joint venture can be considered a kind of brownfield investment.

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Title: How Existing Organizational Practices Affect the Transfer of Practices to International Joint Ventures
Author: Eric W. K. Tsang
Publication date: 02-09-2015
Publisher: Springer Berlin Heidelberg
Published in: Management International Review / Issue 4/2016
Print ISSN: 0938-8249
Electronic ISSN: 1861-8901
DOI: https://doi.org/10.1007/s11575-015-0261-8

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