Absorptive capacity, learning, and performance in international joint ventures

TLDR

The study proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). The model posits that trust between parent firms and the IJV, the IJV’s learning structures and processes, and its strategy and training competence jointly shape the IJV’s ability to understand, assimilate, and apply new knowledge from foreign parents. The empirical analysis of Hungarian IJVs confirms the model’s predictions for knowledge understanding and application, partially supports knowledge assimilation, and shows that trust and foreign‑parent management support are linked to performance but not to learning. © 2001 John Wiley & Sons, Ltd.

Abstract

Abstract This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge . Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.