Abstract
Joint Ventures (JVs) have become popular vehicles for foreign market servicing, but few studies have focused on the joint venturing activities of Small and Medium-sized Enterprises (SMEs). This article examines the activities of 9 U.K. and 12 German SME joint ventures in China. Based on a questionnaire survey and in-depth case interviews, it reveals that the JVs, though successful, are not without their problems and the experiences are similar to those of large multi-national enterprises. As the key to success is the choice of the joint venture partner, assistance is required to help SMEs identify and select appropriate partners.
Similar content being viewed by others
References
Acs, Z.J. & Preston, L. 1997. Small and medium-sized enterprises, technology, and globalisation: introduction to a special issue on small and medium-sized enterprises in the global economy. Small Business Economics, 9(1): 1–6.
Acs, Z.J., Morck, R., Shaver, J.M. & Yeung, B. 1997. The internationalisation of small and medium-sized enterprises: a policy perspective. Small Business Economics, 9(1): 7–20.
Albaum, G., Strandskov, J., Duerr, E. & Dowd, L. 1992. International marketing and export management. Wokingham: Addison-Wesley Publishing.
Anyansi-Archibong, C.B. 1989. Small business in China’s special economic zones. Journal of Small Business Management, 27(2): 56–58.
Au, A.K.M. & Enderwick, P. 1994. Small firms in international joint ventures in China: the New Zealand experience. Journal of Small Business Management, 32(2): 88–94.
Barkema, H.G., Bell, J.H.J. & Pennings, J.M. 1996. Foreign entry, cultural barriers and learning. Strategic Management Journal, 17(2): 151–166.
Beamish, P.W. 1985. The characteristics of joint ventures in developed and developing countries. Columbia Journal of World Business, 20(3): 13–19.
Beamish, P.W. 1993. The characteristics of joint ventures in the People’s Republic of China. Journal of International Marketing, 1(2): 29–48.
Beamish, P.W. & Wang, Y. 1989. Investing in China via joint ventures. Management International Review, 29(1): 57–64.
Buckley, P.J. 1979. Foreign investment success for smaller firms. Multinational Business, 3(3): 12–19.
Buckley, P.J. 1983. New theories of international business; some unresolved issues. In M. Casson (Ed), The growth of international business (pp.~34–50) London: George Allen and Unwin.
Buckley, P.J. 1997. International technology transfer by small and medium sized enterprises. Small Business Economics, 9(1): 67–78.
Buckley, P.J. & Casson, M. 1976. The future of multi-national enterprise. London and Basingstoke: Macmillan.
Buckley, P.J., Newbould, G.D. & Thurwell, J.C. 1988. Foreign direct investment by smaller UK firms; the success and failure of first-time investors abroad. London: Macmillan.
Campbell, K. 1997. The minnows’ fight against the sharks. Financial Times, 24(Oct): 16.
Caves, R.E. 1971. International Corporations; the industrial economics of foreign investment. Economica, 38(Feb.): 1–27.
Caves, R.E. 1982. Multinational enterprise and economic analysis. New York: Cambridge University Press.
Cavusgil, S.T. 1980. On the internationalisation process of firms. European Research, 8(Nov.): 273– 281.
Child, J. 1994. Management in China during the age of reform. Cambridge: Cambridge University Press.
Connolly, S.G. 1984. Joint ventures with third world multinationals: a new form of entry to international markets. Columbia Journal of World Business, 19(2): 18–22.
Contractor, F.J. & Lorange, P. 1988. Competition vs. co-operation: a cost/benefit framework for choosing between fully-owned investments and co-operative relationships. Management International Review, Special Issue: 5–18.
Danenburg, W.P. & Tan, Z.Y. 1989, The ‘Sparking Program’ and its effects on small business in the People’s Republic of China. Journal of Small Business Management, 27(2): 60–62.
Datta, D.K. 1988. International joint ventures: a framework for analysis. Journal of General Management, 14(2): 78–91.
Dillman, D.A. 1978. Mail and telephone surveys. New York: Wiley.
Donckels, R. & Lambrecht, J. 1995. Joint ventures; no longer a mysterious world for smes from developed and developing countries. International Small Business Journal, 13(2): 10–26.
Dunning, J.H. 1993. The globalisation of business. London:Routledge.
Eden, L., Levitas, E. & Martinez, R.J. 1997. The production, transfer and spill-over of technology: comparing large and small multinationals as technology producers. Small Business Economics, 9(1): 53–66.
Fan, Y. 1996. Research on joint ventures in China: progress and prognosis. In R. Baran, Y. Pan & E. Kaynak (Eds.), International joint ventures in East Asia. (pp.~71–88). New York: International Business Press.
Fujita, M. 1993. Small and medium-sized transnational corporations: role, impact and policy implications. New York: United Nations.
Fujita, M. 1995. Small and medium sized transnational corporations: trends and patterns of foreign direct investment. Small Business Economics, 17(3): 183–204.
Gomes-Casseres, B. 1989. Joint ventures in the face of global competition. Sloan Management Review, 30(3): 17–26.
Gomes-Casseres, B. 1997. Alliance strategies of small firms. Small Business Economics, 9(1): 33–44.
Grub, P.D. & Lin, J.H. 1991. Foreign direct investment in China. New York: Quorum Books
Hamill, J. & Hunt, G. 1993. Joint Ventures in Hungary: key success factors. European Management Journal, 11(2): 238–247.
Harrigan, K.R. 1984. Joint ventures and global strategies. Columbia Journal of World Business, 29(2): 67–69.
Harrigan, K.R. 1985. Strategies for joint ventures. Lexington (MA): Lexington Books.
Hennart, J.F. & Reddy, S. 1997. The choice between merger/acquisitions and joint venture; the case of Japanese investors in the United States. Strategic Management Journal, 18(1): 1–12.
Herzfeld, E. 1983. Joint ventures. Bristol: Jordans.
Hood, N. & Young, S. 1979. The economics of multinational enterprise. London: Longman.
Kaiser, S.H. & Kirby, D.A. 1996. China in focus. Paper presented at the international conference on development strategies for SMEs, Changzhou, China.
Kaiser, S., Kirby, D.A. & Fan, Y. 1996. Foreign direct investment in China; an examination of the literature. Asia Pacific Business Review, 2(3): 44–65.
Kaufmann, F. 1995. Internationalisation via co-operation—strategies of sme. International Small Business Journal, 13(2): 27–33.
Killing, P.J. 1983. Strategies for joint venture success. New York:Praeger.
Kindleberger, C.P. 1979. The theory of Direct Investment. In D.R. Lessard (Ed.), International financial management. Boston: Warren, Gorman and Lamont.
Kohn, T.O. 1997. Small firms as international players. Small Business Economics, 9(1): 45–51.
Lane, H.W. & Beamish, P.W. 1990. Cross-cultural cooperative behaviour in joint ventures in LDCs. Management International Review, 30: 87–102.
Leung, T. & Yeung, L.L. 1995. Negotiations in the People’s Republic of China: results of a survey of small businesses in Hong Kong. Journal of Small Business Management, 3(1): 70–77.
Mulhearn, A. 1994. The European SME sector: definitional problems and the policies of the European Commission. Journal of European Business Education, 4(1): 46–60.
OECD Observer. 1981. International direct investment: a change in pattern. Part 112, September, 9–13.
Osland, G.E. & Cavusgil, S.T. 1996. Performance issues in US-China joint ventures. California Management Review, 38(2): 106–130.
Poynter, T.A. 1985. Multinational enterprise and government intervention. New York: St. Martin’s Press.
Reynolds, J.T. 1997. New and small firms in expanding markets. Small Business Economics, 9(1): 79– 84.
Robock, S.H. & Simmonds, K. 1989. International business and multinational enterprise. Irwin: Homewood.
Root, F.R. 1987. Entry Strategies for international markets. Lexington (MA): D.C. Heath.
Rugman, A.M. 1983. The comparative performance of U.S. and European multinational enterprises, 1970–79. Management International Review, 23(2): 4–14.
Rugman, A.M., Lecraw, D.J. & Booth, L.D. 1985. International business—firm and environment. New York: McGraw-Hill.
Schaan, J.-L. 1988. How to control and joint venture success even as a minority partner. Journal of General Management, 14(1): 4–17.
Shaw, S.M. & Meier, J. 1993. Second generation Macs in China. The McKinsey Quarterly, 4: 3–16.
Stratos. 1990. Strategic orientations of small european businesses. Aldershot: Gower Publishing Company Limited.
Tai, L.S.T. 1988. Doing business in the People’s Republic of China: Some keys to success. Management International Review, 28(1): 5–9.
Teece, D.J. 1981. The multi-national enterprise; market failure and market power considerations. Sloan Management Review, 22(3): 3–17.
Teece, D.J. 1985. Multinational enterprise, internal governance and industrial organisation. American Economic Review, 75(May): 233–238.
UNCTAD, 1997. World investment report. New York.
Vanhonacker, W. 1997. Entering China: an unconventional approach. Harvard Business Review, March/April, 130–140.
Vatne, W. 1995. Local resource mobilisation and internationalisation strategies in small and medium sized enterprises. Environment and Planning, 27(1): 63–80.
Wells, L.T. 1973. Effects of policies encouraging foreign joint ventures in developing countries. In E.B. Ayal (Ed.), Micro aspects of development (pp.~149–177) New York: Praeger.
Wu, W. 1993. A study of the determinants of EC firms’ entry mode choice into the Chinese market: licensing or joint venture. Paper Presented at the UK Annual Conference, Pontybridge.
Young, S., Hamill, J., Wheeler, C. & Davies, J.R. 1989. International market entry and development. Engelwoods Cliff (NJ): Prentice Hall.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Kirby, D.A., Kaiser, S. SME Foreign Direct Investment: An Examination of the Joint Venture Experiences of German and U.K. Small and Medium Sized Firms in China. Entrepreneurship Mgt. 1, 83–104 (2005). https://doi.org/10.1007/s11365-005-6677-z
Issue Date:
DOI: https://doi.org/10.1007/s11365-005-6677-z