Outcomes of learning through international joint ventures for local parent firms : evidence from Russia

Abstract

It has been long recognized that joint ventures (JVs) provide parent firms with an excellent opportunity for learning. This phenomenon is particularly interesting in transition economies, such as Russia, where local governments have promoted the establishment of JVs due to a belief that local firms can benefit from acquisition of foreign firms’ technological and managerial knowledge. However, the JV literature to date lacks empirical evidence of performance implications of learning through a JV for local parent firms in transition economies. Rather, it mainly concentrates on understanding learning outcomes at the JV level. Moreover, the comprehensive empirical tools allowing the full range of these implications to be captured are still underdeveloped. Thus, this thesis fills this gap and examines the performance implications for Russian firms of learning through Russian-Western manufacturing JVs. Furthermore, the study draws on insights from the innovation and strategy literature to develop comprehensive measurements of JV learning at the parent level and assess the influence of learning through JVs on the upgrading of technological and managerial capabilities of Russian parent firms, as well as on their modernization, restructuring and long-term competitiveness.

The complex nature of the research issue and the practical obstacles associated with undertaking research in Russia has called for the development of a novel methodological design. Hence, mixed methods combining a pilot survey with a multiple case study approach have been used to acquire reliable and rich empirical evidence. The survey was implemented at the first stage of data collection and was followed by an in-depth investigation of three manufacturing Russian JV parent firms from the aircraft engine building, automotive and auto component sectors.

The research found that, although upgrading took place in all functional areas of technological capabilities as well as managerial capabilities, Russian parent firms upgraded production process and investment capabilities to the largest extent, which is also perceived as the most important outcome from learning through JVs. Moreover, this upgrading permits the speeding up the process of modernization and strategic large-scale restructuring of Russian parent firms, and the achievement of sustainable competitive advantage within Russian and Commonwealth of Independent States markets. A further important finding of the study is that the beneficial application of JV knowledge in Russian parent firms is strongly inhibited by the presence of organizational inertia, rigid organizational structure and underdeveloped knowledge management mechanisms. Moreover, external factors associated with inefficient functioning of Russian System of Innovation that fail to support innovative activities of local firms seriously constrain the extent of positive outcomes from JV learning for Russian parent firms.