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Acquisition of organizational capabilities and competitive advantage of IJVs in transition economies: The case of Vietnam

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Abstract

Using Vietnam as the context, the study empirically examines how the competitive advantage of international joint ventures (IJVs) in transition economies is affected by the acquisition of resources from foreign partners and of local market-based resources. Our study contributes to the nascent literature on IJVs in transition economies by producing several novel and interesting findings. First, it demonstrates the need to modify certain arguments of the resource-based view (RBV) when applied to IJVs in transition economies. This paper shows that the peculiar market characteristics of transition economies serve as an imitation barrier turning even property-based resources into sources of sustainable competitive advantage. Second, the positive impact of knowledge-based resources on the IJV’s competitiveness seems to be significantly enhanced as the ownership by the foreign parent increases. Lastly, competitive advantage of IJVs appears to be strengthened when the transfer of property-based resources is complemented by that of knowledge-based resources, and when the transfer of internal, firm-specific resources is complemented by that of external, market-based ones. We believe that these findings make significant, incremental theoretical and empirical contributions to both the RBV and IJV literatures.

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Authors and Affiliations

  1. Faculty of Economics and Business, The University of Sydney, Sydney, 2006, Australia

    Wu Zhan

  2. School of Business and Management, University of San Francisco, 2130 Fulton Street, San Francisco, CA, 94117, USA

    Roger (Rongxin) Chen

  3. Stuart School of Business, Illinois Institute of Technology, 565, W. Adams, Suite 450, Chicago, IL, 6066, USA

    M. Krishna Erramilli

  4. Faculty of Commerce-Tourism & Marketing, Ho Chi Minh City University of Economics, 54C Nguyen Van Thu St., District 1, Ho Chi Minh, Vietnam

    Duc Tri Nguyen

Authors
  1. Wu Zhan
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  2. Roger (Rongxin) Chen
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  3. M. Krishna Erramilli
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  4. Duc Tri Nguyen
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Corresponding author

Correspondence to Roger (Rongxin) Chen.

Appendix: Variables used in the study

Appendix: Variables used in the study

Y. Sustainable Competitive Advantage of IJV (COMPAD) α = 0.74

Five-item scale based on the following question: To what extent do you agree/disagree with statements about your IJV’s competition? (1 = strongly disagree, 5 = strongly agree).

  1. (a)

    It is difficult for our competitors to compete against us

  2. (b)

    Our product is so unique that only our IJV can offer it

  3. (c)

    We always take a lead in any market in which we compete

  4. (d)

    Our IJV is able to follow any competitor’s practices

  5. (e)

    Our competitors are not as capable as we are in satisfying our customers

X1 Acquisition of Property-based Resources (PROPRES) α = 0.92

Three-item scale based on the following question: Relative to your expectation, to what extent has your IJV acquired the following type of resources from its foreign partner(s)? (1 = far less than expected, 5 = far more than expected).

  1. (a)

    Leading edge plant

  2. (b)

    Advanced equipment

  3. (c)

    Modern production facilities

X2 Acquisition of Knowledge-based Resources (KNOWRES) α = 0.88

Five-item scale based on the following question: Relative to your expectation, to what extent has your IJV acquired the following types of resources from its foreign partner(s)? (1 = far less than expected, 5 = far more than expected).

  1. (a)

    Marketing expertise

  2. (b)

    Knowledge about the foreign cultures and tastes

  3. (c)

    Managerial techniques

  4. (d)

    Production process expertise

  5. (e)

    Business operational experience

X3 Acquisition of Market-based Resources (MARKRES) α = 0.83

Three-item scale based on the following question: Relative to your expectation, to what extent has your IJV acquired the following types of resources? (1 = far less than expected, 5 = far more than expected).

  1. (a)

    Unique preferential treatment from local government

  2. (b)

    Access to local market and strategic resources

  3. (c)

    Access to local distribution channel

X4 The gap between two types of internal resources (GAP)

The absolute difference, namely, absolute value, between acquisition of property-based resources and acquisition of knowledge-based resources.

X5 Learning Capacity of IJV (LEARN) α = 0.72

Six-item scale based on following question: To what extent do you agree/disagree with statements about your IJV? (1 = strongly disagree, 5 = strongly agree).

  1. (a)

    The IJV is dynamic to change

  2. (b)

    The IJV is adaptive to change

  3. (c)

    Employees are capable of acquiring new resources

  4. (d)

    Employees are encouraged to learn new skills

  5. (e)

    Employees are rewarded to master new resources

  6. (f)

    Employees are systematically trained to exploit effectively new resources

X6 Foreign Ownership of IJV (FOROWN)

A continuous variable measuring the equity percentage owned by foreign partner(s).

X7 Age of IJV (AGE)

The operation time of IJV in years since establishment.

X8 Size of IJV (SIZE)

The logarithm form of the number of employees of IJV.

X9 Investment of IJV (INVEST)

The logarithm form of total investment (USD) of IJV.

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Zhan, W., Chen, R.(., Erramilli, M.K. et al. Acquisition of organizational capabilities and competitive advantage of IJVs in transition economies: The case of Vietnam. Asia Pac J Manag 26, 285–308 (2009). https://doi.org/10.1007/s10490-008-9108-1

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