Parent control and IJV performance in China : an examination from local partner’s managerial perspective = 합작 모기업의 경영통제가 조인트벤처 경영 성과에 미치는 영향 : 중국 현지 모기업의 경영자 관점에서

• Main Authors: Hwang, Yong-Sik, Chen, Dong, Park, Seung Ho
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2020
• Subjects: Business::Management; Parent Control; Chinese Management
• Online Access: https://hdl.handle.net/10356/145428
• Institution: Nanyang Technological University

While the majority of research on international joint ventures(IJVs) focused on the foreign parent’s perspective, this study examined the relationships between IJV control system and local parent goal achievement. Using a sample of 194 IJVs in China, we identified three types of parent control: strategic control, specific control, and social control, exercised by both foreign and local parent firms. Our findings showed that Chinese parent controls were positively associated with their own goal achievement, while the relationships between foreign parent control and Chinese parent goal achievement were mixed. In this study, parent control is divided into three types exercised by both foreign and local parent firms. And their relationships with local parent goal achievement are examined using a sample of IJVs in China. The findings of this study help depict the control system in IJVs and advance the understanding of the control-performance relationship. According to our study results, Chinese parent firms tend to benefit from their own control over IJVs, their perceptions of the performance implications of foreign parent control are relatively mixed. Consistent with transaction cost economics, our study confirms the importance of parent control. The positive relationships between Chinese parent control and goal achievement suggest that the exercise of strategic control, specific control and social control may have an impact on parent satisfaction. Parent firms may not only make IJV management to pursue parent firms’ requirements, but also benefit directly from involving into IJV activities. While strategic control directs IJV strategies towards a parent firm’ likeness, specific control enables the parent to protect its strategic assets and access complementary resources, and social control may change IJV culture in favor of the parent. This study may provide important implications for IJV practice in China. On the one hand, the results support the importance of control to local parent firms. To achieve their own objectives, Chinese parent need to exercise strategic control, specific control, and social control. On the other hand, this study helps MNEs better understand their Chinese partners. An important implication is that greater foreign control does not necessarily lead to lower local parent satisfaction. They would prefer a moderate level of foreign parent specific control, given foreign parents’ need for knowledge protection. They may even welcome foreign parent social control. It is critical that MNE managers are aware of the implications of different control types as they try to impose control over the IJV. Local parent satisfaction concerns not only the local partner but also the MNE partner. Unsatisfied local partners may create conflicts, withhold contribution, and eventually break up the partnership. Without achieving a minimum level of local parent satisfaction, the IJV would not be a success. Several limitations of this study should be acknowledged. First, this study used cross-sectional data. Thus the direction of relationships cannot be clearly defined. The research results should be interpreted carefully. Second, the study sample was composed of relatively big IJVs with an average age of 10, which might be subject to selection biases. It is likely that the findings are more applicable to long-standing partnerships instead of relatively new ones. Third, for practical reasons, we were not able to collect data from multiple informants for all cases. 기존의 조인트벤처 경영성과에 관한 연구가 외국 모기업의 경영자 관점에서만 다루어 졌다면 본 연구는 현지 조인트벤처 경영자의 관점에서도 분석한 연구로 큰 의미가 있다. 모기업의 경영통제를 크게 전략적 경영통제, 세부적인 경영통제, 사회적 경영통제로 나누 었고 각각의 유형에 따른 경영성과를 실증적으로 분석하였다. 중국에 진출한 194개의 조인트벤처 업체들을 조사했으며 중국 현지 모기업의 경영통제는 전반적으로 조인트벤처 경영성과에 긍정적인 영향을 준 것으로 분석되었다. 하지만 외국계 모기업의 경영통제는 부분적으로만 긍정적인 영향을 미쳤다. 기존의 연구와 유사하게 모기업 통제의 중요성이 입증되었다. 아울러 전략적 경영통제는 해외파트너 기업의 경영성과에 긍정적인 영향을 끼칠 수 있다는 점도 의미있는 결과로 분석된다. 아울러 모기업의 사회적 경영통제의 역할의 중요성을 본 연구를 통해 발견하게 되었다. 사회적 통제란 모기업과 현지기업간의 긴밀한 교류를 통해 조인트벤처의 긍정적인 성과를 이룰 수 있는 것인데 이러한 부분들이 본 연구를 통해 입증되었다. 본 연구를 통해서 현지 업체의 경영자 관점에서 보는 조인트 벤처 성과에 관한 연구가 향후에도 활발히 진행될 것을 기대해 본다.