Knowledge acquisition from foreign parents in international joint ventures an empirical study in vietnam

The results show that all three components ofabsorptive capacity contributed substantially to the level of knowledge acquisition reported by IJVs.Critical factors predicting knowledge ac

International Business Review 15 (2006) 463–487

Knowledge acquisition from foreign parents in international joint ventures: An empirical

study in Vietnam

Phan Thi Thuc Anha, , C Christopher Baughnb,

Ngo Thi Minh Hanga, Kent E Neupertc

aNEU Business School, National Economics University, Hanoi, Vietnam

bDepartment of Management, Boise State University, Boise ID 83725, USA

c

College of Business and Economics, Boise State University, Boise ID 83725, USA

Received 16 December 2005; received in revised form 19 March 2006; accepted 5 May 2006

Abstract

Drawing on alliance learning and absorptive capacity literatures, we propose a model-linkingabsorptive capacity, knowledge acquisition, and performance The model is tested in a sample of 173international joint ventures (IJVs) in Vietnam The results show that all three components ofabsorptive capacity contributed substantially to the level of knowledge acquisition reported by IJVs.Critical factors predicting knowledge acquisition included investment in training, employees’ ability

to learn, and joint participation Knowledge acquisition, especially the acquisition of tacitknowledge, was found to contribute significantly to IJV performance Our model generally supportsexisting theories regarding the relationship between absorptive capacity and knowledge acquisition,

as well as between knowledge acquisition and performance

r2006 Elsevier Ltd All rights reserved

Keywords: Knowledge acquisition; International joint ventures; Absorptive capacity

Corresponding author Tel.: +844 869 0055x126; fax: +844 869 1682.

E-mail addresses:ptanh@bsneu.edu.vn (P.T Thuc Anh) , cbaughn@boisetstate.edu (C Christopher Baughn) ,

nmhang@bsneu.edu.vn (N.T Minh Hang) , kneupert@boisetstate.edu (K.E Neupert)

Learning from foreign parents is considered to be a determinant of the success of IJVs,especially IJVs in transitional economies since firms in these economies often lack thenecessary knowledge and skills to compete in international markets (Dhanaraj, Lyles,Steensma, & Tihanyi, 2004;Lane, Salk, & Lyles, 2001;Lyles & Salk, 1996).

Despite the importance of joint venture learning, it has been found to be a difficult andmisunderstood process, often coupled with considerable frustration (Crossan & Inkpen,

1995;Martin & Salomon, 2003) This paper aims to increase our understanding of the field

by proposing a model-linking IJV absorptive capacity, knowledge acquisition andperformance, and testing it in Vietnam, an economy in transition The contribution ofthis paper is twofold First, while conceptually absorptive capacity has been recognized as

a multidimensional construct (Cohen & Levinthal, 1990;Zahra & George, 2002), empiricalresearch often equates it with the R&D intensity measured by the percentage of R&Dspending in total sales This approach is too simple in that it cannot fully reflect therichness of the construct (Zahra & George, 2002) Two notable exceptions that haveattempted to propose and test a multidimensional model of organizational absorptivecapacity in the learning field are studies by Lane et al (2001) andMinbaeva, Pedersen,Bjorkman, Fey, and Park (2003) These models, however, could only capture a part of theconstruct The model proposed by Minbaeva et al (2003) addresses the human sideincluding employee ability but not the organizational mechanisms Lane et al.’s model(2001)included organizational aspects but did not explicitly address the human side Aspointed out byCohen and Levinthal (1990), both human and organizational mechanismsare important aspects of organizational absorptive capacity In this paper, we contribute tothe development of the construct by proposing a model of absorptive capacity that takesinto account its multidimensionality, incorporating both human capital and organizationalaspects

Second, although knowledge is often conceptually classified into tacit and explicit types,empirical research to date largely seems to have ignored this fact and tested only generalknowledge acquisition This offers limited insights into how different absorptive capacitycomponents predict different types of knowledge as well as how different types ofknowledge predict IJV performance By dividing knowledge acquisition into tacit andexplicit knowledge (Nonaka & Takeuchi, 1995;Polanyi, 1958), this paper helps to clarifysuch relationships

The paper is structured as follows: the next section is a review of theoretical foundationsfor the main constructs, followed by a section on hypotheses development We thenbriefly describe Vietnam, the research site The subsequent section is methodology of theresearch, then the research results The paper is completed by discussion and conclusionsections

2 Theoretical foundations

The theoretical foundation for knowledge acquisition in IJVs is the knowledge-basedtheory of the firm (Grant, 1996a, 1996b; Kogut & Zander, 1992, 1996; Nonaka, 1994;

Nonaka & Takeuchi, 1995) According to this view, knowledge, especially tacit knowledge,

is the most important strategic resource and the ability to acquire, integrate, store, share,and apply it the most important capability for building and sustaining competitiveadvantage Thus, an IJV effective acquisition of its foreign parent knowledge woulddetermine the IJV performance (Dhanaraj et al., 2004; Lyles & Salk, 1996) Knowledge

acquisition, in turn, is determined by a number of factors, especially absorptive capacity ofthe recipient firm (Lane & Lubatkin, 1998; Lane et al., 2001; Lyles & Salk, 1996) Thefollowing paragraphs provide detailed reviews of three main constructs in the IJVknowledge acquisition process.

2.1 Knowledge

Knowledge is defined differently by different authors For example, it is described as

‘justified beliefs’ (Polanyi, 1958), ‘valuable information in action’ (Grayson & Dell, 1998,

p 2) Davenport and Prusak (1998, p 5) proposed a quite complete definition ofknowledge:

Knowledge is a fluid mix of framed experience, values, contextual information, andexpert insight that provides a framework for evaluating and incorporating newexperiences and information It originates and is applied in the minds of knowers Inorganizations, it often becomes embedded not only in documents or repositories butalso in organizational routines, processes, practices, and norms

According to the authors, knowledge is more than information—it is ‘deeper’ and

‘richer’, including various elements; it is fluid as well as formally structured; it is intuitiveand therefore hard to capture in words or understand completely in logical terms.Knowledge from the foreign parent(s) consists of the knowledge held by the parent’semployees as well as knowledge embedded in the parental organizations’ policies,procedures, norms, systems and processes

Knowledge is commonly classified according to whether it is tacit or explicit Tacitknowledge was defined byPolanyi (1966)as knowledge that is non-verbalizable, intuitive,unarticulated Tacit knowledge is highly context specific and has a personal quality,which makes it hard to formalize and communicate (Nonaka, 1994) By contrast,explicit knowledge is knowledge that can be codified, articulated and easy to becommunicated Explicit knowledge rests on a company’s policies, systems, guidelines, andprocedures

2.2 Knowledge acquisition

Knowledge acquisition is ‘the process by which knowledge is obtained’ (Huber, 1991,

p 90) In this study, IJV knowledge acquisition from foreign parents is defined as a process

by which an IJV obtains new knowledge from its foreign parent Acquired knowledge doesnot have to be newly created, only new to the organization (Davenport & Prusak, 1998).Knowledge acquired can be tacit, explicit or a combination of both

Knowledge acquisition results from individual participation and interactions with tasks,technologies, resources, and people within a particular context (Bourdieu, 1990;Brown &Duguid, 1991;Garud & Rappa, 1994;Tsoukas, 1996) Individuals acquire knowledge, butorganizations create a context for individuals to acquire that knowledge In IJV learning,the IJV and its relationship with the foreign parent is the context in which knowledge isacquired by the IJV’s individual members The acquired knowledge will become the IJV’sknowledge through the organizational knowledge creation process which is described by

Nonaka, Takeuchi, and Umemoto (1996, p 834) as ‘a process that ‘organizationally’amplifies the knowledge created by individuals and crystallized it as a part of the

knowledge system of organization’ Following Alavi and Leidner (2001) and Lyles andSalk (1996), in this study, knowledge acquisition is considered as an ongoing activity ratherthan a discrete outcome.

2.3 Absorptive capacity

Absorptive capacity has received a lot of attention from the research community since itsfirst introduction by Cohen and Levinthal (1990) There are many definitions oforganizational absorptive capacity, but probably the most widely cited is that of theauthors: ‘the ability to recognize the value of new, external information, assimilate it andapply it to commercial ends’ (Cohen & Levinthal, 1990, p 128)

Organizational absorptive capacity rests on individuals’ absorptive capacities but it isnot simply the sum of individuals’ absorptive capacities Aspects that make absorptivecapacity distinctly organizational include the structure of communication between theexternal environment and the organization as well as among the subunits of theorganization, and the character and distribution of expertise within the organization itself(Cohen & Levinthal, 1990)

Organizational absorptive capacity is a multicomponent construct For IJV learning,

Lane and Lubatkin (1998)andLane et al (2001) suggested three components based on

Cohen and Levinthal’s (1990)original definition: (1) the ability to understand new externalknowledge, (2) the ability to assimilate it, and (3) the ability to apply it to commercial end

Minbaeva et al (2003) suggested that in the context of knowledge transfer withinmultinational corporations, an organization’s absorptive capacity should be comprised ofits employees’ ability and motivation Zahra and George (2002) reconceptualized theconstruct as a dynamic capability to include four components: (1) acquisition, (2)assimilation, (3) transformation, and (4) exploitation capabilities Their model provides apromising avenue for research on absorptive capacity yet is not specially designed for IJVsand has not been empirically tested

In this paper, we propose an integrated model of absorptive capacity that takes intoaccount the most recent developments in construct building as well as its most relevantfeatures in the IJV learning context The model consists of three components as originallyconceptualized by Cohen and Levinthal (1990) with each component represented by anumber of factors summarized in the left hand side ofFig 1, the conceptual model of theknowledge acquisition process in IJVs In the following section, we elaborate on eachcomponent by offering a more detailed review of studies on the relationship betweenfactors representing IJV absorptive capacity and its level of knowledge acquisition andpropose a number of hypotheses

3 Hypotheses

3.1 Component 1: ability to recognize the value of new external knowledge

Recognizing the value of new external knowledge is the first step toward knowledgeacquisition An IJV’s ability to recognize the value of new external knowledge isrepresented by two factors: (1) relatedness between an IJV and its foreign parent’s businessand (2) the IJV’s investment in training

3.1.1 Relatedness between IJV and foreign parent’s business

Cohen and Levinthal (1990) contend that prior related knowledge is necessary for anorganization to identify the value of new external knowledge Prior related knowledge isdescribed by the authors as various related knowledge domains, basic skills and problemsolving methods, prior learning experience and learning skills, and a shared language.Similarly, Zahra and George (2002)posited that prior related knowledge is a part of afirm’s acquisition capability described as the firm’s capability to identify and acquireexternally generated knowledge Likewise,Eriksson and Chetty (2003)argued that a firm’sprior experience contributed to its absorptive capacity As relatedness between an IJV andits foreign parent business gives the IJV some prior knowledge of the industry, products,and customers that are related to the knowledge held by their foreign parent, it can be used

as a proxy for prior related knowledge Indeed, business relatedness has been addressed inthe IJV learning literature (Hanvanich, Richards, Miller, & Cavusgil, 2005; Lane &Lubatkin, 1998;Lane et al., 2001;Merchant & Schendel, 2000) as having the potential toaffect an IJV’s knowledge acquired from its foreign parent Therefore:

H1 Relatedness between an IJV and its foreign parent business is positively associatedwith the IJV’s level of knowledge acquisition from the foreign parent

3.1.2 IJVs’ investment in training

It is important to recognize that merely having related knowledge is insufficient andintensity of efforts from the firms as learners is critical for recognizing the value of newexternal information (Cohen & Levinthal, 1990;Kim, 2001) As noted by Inkpen (2000),some firms take a very aggressive approach to knowledge acquisition in alliances, whileothers evidence a more passive approach Intensity of efforts is defined as ‘effort expended

in knowledge acquisition routines’ (Zahra & George, 2002, p 189) A direct measure ofthis effort would be investment in training Committing financial and other resources tosupport the acquisition and sharing of information can build a learning capacity whichmay help to overcome barriers to knowledge transfer (Simonin, 1999) Such investments

Fig 1 The conceptual model.

may be especially important for knowledge transfer to developing countries, reflectinggreater needs for technical support and adaptation (Contractor, 1980).

H2 An IJV’s investment in training is positively associated with its level of knowledgeacquisition from the foreign parent

3.2 Component 2: ability to assimilate new external knowledge

‘Assimilating foreign parent knowledge is a sense-making process whereby the IJVconnects the new knowledge to its existing knowledge’ (Lane et al., 2001, p 1157) Theability to assimilate new external knowledge is captured by (1) its employees’ ability tolearn and (2) the cultural distance between partners While ability to learn directly reflectsthe ability to assimilate new knowledge, cultural distance serves as the context thatfacilitates or inhibits this ability

3.2.1 Employees’ ability to learn

Zahra and George (2002) asserted that measures of a firm’s absorptive capacity mustcapture its members’ capabilities Taking this insight,Minbaeva et al (2003)posited that asubsidiary’s employees’ ability is a critical component of the subsidiary’s absorptivecapacity and is needed to facilitate the transfer of knowledge from multina-tional corporations to the subsidiary itself Extending the argument to IJV context,

an IJV’s absorptive capacity must also reside in its employees’ ability, and employees’ability to learn will influence the IJV’s level of knowledge acquired from the foreign parent.Thus,

H3 An IJV’s employees’ ability to learn is positively associated with the IJV’s level ofknowledge acquisition from its foreign parent

3.2.2 Cultural distance

Cultural differences can create various problems in IJVs, including communicationdifficulties, unsuccessful negotiations, and time-consuming problem solving In manycases, such incompatibilities can lead to JV instability, reduced ability to benefit fromknowledge spillovers, and IJV failures (Parkhe, 1991, 1993) The sharing of knowledge andlearning may be inhibited by such cultural boundaries (Hanvanich et al., 2005; Lane &Lubatkin, 1998;Salk, 1996;Simonin, 1999) Thus,

H4 Cultural distance between partners in an IJV is negatively associated with the IJV’slevel of knowledge acquisition from the foreign parent

3.3 Component 3: ability to apply new external knowledge

‘Applying external knowledge involves the ability to diffuse knowledge within theorganization, to integrate it with the organization’s activities, and to generate newknowledge from it’ (Lane et al., 2001, p 1157) In our model, this component of absorptivecapacity is represented by (1) joint participation of local personnel and expatriates in IJVactivities and (2) the IJV’s written goals and plans Joint participation provides

opportunities for knowledge diffusion as well as opportunities to immediately integratenew knowledge into the IJV activities Written goals and plans serve as an organizationaltool to facilitate knowledge application Together, the two proposed factors reflect notonly the IJV’s ability to apply new knowledge but also the organizational mechanismsthrough which assimilated knowledge can be applied As noted by Inkpen (1998),Lylesand Salk (1996), and Zahra and George (2002), learning requires appropriateorganizational policies, structures and processes.

3.3.1 Joint participation

The structuring of tasks, decision-making authority and interaction patterns devised forthe IJV may enlarge or limit the window of opportunity for knowledge flow At oneextreme, the alliance may be crafted to facilitate high levels of joint collaboration andextensive exchange of information At the other extreme, alliances may involve amore modularized approach, in which certain activities or component production by oneparty are ‘walled off’ from the other (Hladik, 1988;Moxon, Roehl, & Truitt, 1988) Asnoted by Cohen and Levinthal (1990), pushing specialization too far may underminecommunication and learning To the extent that the host country members of the IJV aresimply following the directives of the foreign parents, they may not be exposed to thediverse information, new perspectives or opportunity to practice new patterns andassociations

A requirement for applying complex organizational knowledge may be the activeengagement of both parties Structures that diffuse decision influence and reduce thedistance between strategic decisions and the operational bases of strategic problems canfacilitate learning (Fiol & Lyles, 1985; Shrivastava, 1986) The involvement of jointventure’s local personnel in shared activities and decisions with the expatriates shouldprovide a larger window into the knowledge and understandings held by the foreign parentorganization Indeed, the choice of the joint venture form rather than more arms-length,market-based alliance from may reflect a need to develop a more integrated relationshipconducive to learning (Mowery, Oxley, & Silverman, 1996) Thus,

H5 Joint participation of local personnel with expatriates in shared activities of anIJV is positively associated with the IJV’s level of knowledge acquisition from its foreignparent

3.3.2 Written goals, plans for the IJV

Lyles and Salk (1996) noted that articulated goals and plans can facilitate thedevelopment of commonly understood goals, allowing employees in an organization tofocus learning resources on a common vision and mission Moreover, they can serve

as a mandatory communication tool which can facilitate knowledge sharing amongsubunits and individuals within the IJVs, an aspect that makes absorptive capacitydistinctively organizational (Cohen & Levinthal, 1990) Thus, the extent of goals andplans’ articulation would affect an IJV’s level of knowledge acquired from its foreignparent organization

H6 An IJV’s written goals and plans are positively associated with its level of knowledgeacquisition from the foreign parent

3.4 Absorptive capacity, tacit and explicit knowledge

The extant literature on the role of absorptive capacity in alliance learning has notspecifically addressed the impact of different absorptive capacity components on differenttypes of knowledge: tacit vs explicit knowledge We suspect that several absorptivecapacity factors may have larger impact on one type of knowledge than the other.However, at this stage, we do not form any formal hypotheses for this and leave it asexploratory

3.5 Knowledge acquisition and performance

Although theorists (Hedlund, 1994; Nelson & Winter, 1982; Winter, 1987) suggestedthat knowledge is a key determinant of firm performance, with few exceptions (Lane et al.,

2001;Lyles & Salk, 1996;Si & Bruton, 1999;Steensma & Lyles, 2000), empirical researchhas not yet confirmed this argument in the context of IJVs Moreover, though knowledgeacquisition is considered very important, its relationship with firms’ performance is stillquestionable since the strategic value of the knowledge acquired to the firms’ situation issometimes not fully understood We hypothesize:

H7 An IJV’s level of knowledge acquisition from its foreign parent is positively associatedwith the IJV’s performance

The knowledge-based view of the firm posits that tacit knowledge is a primary source ofsustainable competitive advantage in organizations because it is both unique and relativelyimmobile (Grant, 1996a, 1996b) Empirical research, however, has not yet confirmed thisargument A study of 138 IJVs in Hungary in 2001 byDhanaraj et al (2004) found thatwhile explicit knowledge has a significant positive relationship with performance, tacitknowledge has a significant negative relationship This theory-contradictory result is verysurprising Given that this is the sole empirical research published that explicitly addressedthis issue in interorganizational learning context; we will retest the following hypotheses:H8a An IJV’s level of explicit knowledge acquired from its foreign parent is positivelyassociated with the IJV’s performance

H8b An IJV’s level of tacit knowledge acquired from its foreign parent is positivelyassociated with the IJV’s performance

3.6 Knowledge acquisition, its antecedents and IJV performance

Several studies (Lane et al., 2001; Lyles & Barden, 2000;Lyles & Salk, 1996) stipulatethat knowledge acquisition is the platform through which the predictors of knowledgeacquisition have their impact on IJV performance That is, absorptive capacity factorssuch as relatedness between an IJV and its foreign parent’s business and/or formal goalsand plans do not have a direct impact on performance, but facilitate knowledgeacquisition, which in turn is a driver of IJV performance A different line of research (e.g

Tsai, 2001), however, found that absorptive capacity had a direct effect on organizationalperformance We will therefore test the following hypothesis in a different country setting:

H9 An IJV’s level of knowledge acquisition from the foreign parent mediates therelationship between the IJV’s absorptive capacity and its performance.

4 Research site

We chose Vietnam as our research site because of two reasons First, Vietnam hasonly been recently known as an important player in the international market Over thelast three decades, the country has turned from a food importing nation to the world’ssecond largest rice exporter and an important exporter in coffee, rubber, cashew,fish, textile, garments and shoes industries Despite the downturn of the world economy,this country has achieved an average annual growth rate of 7.5% over the last 5 years(MPI, 2005) Vietnam has been completing its negotiations to join the WorldTrade Organization Second, academically, the country has been relatively un-explored represented by the fact that little academic research has been conducted in thiscountry

Historically, Vietnam has been known in the world as a ‘war-after-war’ country armedconsecutive conflicts with China (prior to 1884), France (1884–1954), and the UnitedStates (1954–1975) Vietnam declared its national independence in 1954 but had undergone

30 years of war before its reunification in 1975

In the period from 1975 to 1985, the economy of Vietnam could be characterized aspurely centrally planned All property was ‘collectively owned’ and no private ownershipwas allowed The economy was closed and trading relationships were limited mainly tocountries in the socialist system Due to its central planning mechanism and closedeconomy in the mid-1980s, Vietnam suffered from serious economic crisis The crisis,coupled with the reform movements in China and the former Soviet Union, pushedVietnam towards a large-scale economic reform beginning in 1986, known as ‘Doi moi’(Harvie & Tran, 1997)

The central idea of ‘Doi moi’ policy is to create ‘a socialist-oriented market economy’that allows for the development of a multi-sector economy, in which the government,cooperative and private sectors co-exist with equal rights (Vietnamese Communists Party,

1986) Several measures were introduced in the ‘Doi moi’ process, of which, theencouragement of foreign investment is considered especially important for shiftingVietnamese economy from ‘closed door’ to ‘open door’, from a command-driven to amarket-driven one The promulgation of the Law on Foreign Investment dated 29December 1987 gave a solid legal basis for foreign investment activities in Vietnam As aresult of this, thousands of foreign-invested enterprises have been formed in the country.The total registered investment capital has reached USD 50 billion from nearly 70 nations,accounting for over 15% of the nation’s GDP, approximately 37% of the industrial outputand 54% of the export turnover (Vu Khoan, 2005)

The Vietnamese investment environment within which IJVs operate is characterized by astable socio-political environment, rich natural resources, a large population, and anambitious, young, hard-working labor force Yet it still suffers from weak institutionalcapacities, poor infrastructure and low level of income (JICA, 2003)

As absorptive capacity is one of the major constraints for IJVs in transitional economies

in acquiring new knowledge from foreign partners (Lane et al., 2001), testing the proposedmodel in Vietnam is relevant The results of this study will help to draw some managerial

implications not only for Vietnamese firms in particular but also for firms in transitioneconomies in general in order to maximize the full benefits of IJVs in light of knowledgeacquisition.

5 Methods

5.1 Sampling

The sample for this study was drawn from a population of more than 1000 internationaljoint ventures provided in a listing by the Ministry of Planning and Investment (MPI), thegovernment authority managing Foreign Direct Investment (FDI) activities in Vietnam.This is the most official and original source of information on foreign investment in thecountry The study focused only on Ho Chi Minh City and Hanoi, the two biggesteconomic centers of the country, where most IJVs are located The actual sample wasdrawn from a list of all IJVs (674) in both locations Our goal was to include at 25% ofthese IJVs in the study

A stratified sampling technique was used to generate a sample based on location,industrial categories grouped by the MPI, and country of origins of foreign partners Oursample is representative of the overall population of IJVs in Vietnam

5.2 Data collection

Data collection was conducted using a self-administered survey Following Lyles andSalk (1996)and Simonin (1999), in each targeted IJV we planned to collect informationfrom the general director or the deputy general director who is responsible for thecompany’s overall performance and for the success of the alliance These top executives are

in the best positions to observe and evaluate knowledge acquisition and performance intheir JVs, or can direct the questionnaires to other individuals within the companies whomay know the situation better (Simonin, 1999)

Data were collected by field researchers who contacted targeted informants based on thelist of all IJVs in studied areas If a contacted person agreed to participate in the survey, thefield researcher delivered the questionnaire directly to him/her Most appointments yieldedimmediate responses In other cases, the field researchers left the questionnaires at thesurvey subjects’ offices and came back to collect them at another time

In total, 260 appointments were made, 218 of which turned out to be successful (158 in

Ho Chi Minh City and 60 in Hanoi) Of the 218 responses, 181 firms were represented byVietnamese respondents and 37 firms were represented by foreign counterparts For thisstudy, only the Vietnamese responses were used Eight surveys were eliminated due tomissing data, yielding a final sample size of 173

Out of 173 respondents, 32 are IJV general directors and 85 are deputy general directors.The rest (56) are department heads or directors’ executive assistants who responded to thesurvey according to the assignments of their superiors The surveyed IJVs had been inoperation from 3 to 14 years, with an average of 7.6 years In most IJVs, foreign partnersheld a substantially larger share of equity than their Vietnamese counterparts Table 1

represents the responding IJV profile based on foreign partners’ countries of origin andsectoral groups

5.3 Measures

5.3.1 Dependent and independent variables

Most of the measures for dependent and independent variables used in this study weredrawn from the literature and used or adapted for the Vietnamese context The measures

of ability to learn and joint participation were developed for this study Each of thedependent and independent variables were measured by multiple items using a Likert-typeformat (1 ¼ strongly disagree to 5 ¼ strongly agree) All of the items in the scales as well asthe source of the items are found in Appendix A

The first version of the questionnaire was developed in English and reviewed by fouracademic experts in the field Several items were then reworded for clarity Thequestionnaire was then translated into Vietnamese by two of the authors and back-translated to English by a separate translator Some differences in wordings between theoriginal version and the back-translated version led to minor revisions, followed by pre-testing and preliminary item analysis before final revisions and administration in the jointventures

5.3.2 Control variables

Control variables for learning models included (1) IJV age, calculated as the number ofyears in operation up to the time the respondents were interviewed, (2) Equity split (local)which is the proportion of equity in the venture held by the Vietnamese parent, and (3)Sectoral groups, a dummy variable (1 ¼ manufacturing and 0 ¼ business service) Lylesand Salk’s (1996)study of Hungarian IJV’s found that the proportion of equity held by theHungarian parent was (inversely) related to knowledge acquisition Lane et al (2001)

found that service industry membership and IJV age affect IJV learning levels Thesepossible relationships argue for the inclusion of the variables The same set of controlvariables was also used for performance models Previous research has found significantcorrelations between IJV age and its effectiveness (Newburry & Zeira, 2003), betweenequity split (Boateng & Glaister, 2002) as well as sectoral group (Lane et al., 2001) and IJVperformance

Table 1

Partner’s country of origin and sectoral groups

Manufacturing, transport Business services

5.4 Measurement assessment

We use factor analysis and reliability analysis to assess the measures employed Resultsare shown inTable 2

Table 2

Results of factor analysis and reliability analysis

Cronbach’s a

Factor 2: ability to learn Ability to learn—technology 0.757 0.86

Ability to learn—marketing techniques 0.791 Ability to learn—managerial techniques 0.792

Factor 3: joint participation Joint participation—informed 0.523 0.83

Joint participation—contribute ideas 0.619 Joint participation—contribute work activities 0.793 Joint participation—making decisions 0.863 Joint participation—shared activities overall 0.861

Factor 5: investment in training Investment in training—technology 0.762 0.86

Investment in training—managerial skills 0.783 Investment in training—overall 0.780 Investment in training—cross-cultural skills 0.597 Factor 6: explicit knowledge Knowledge acquisition—technological expertise 0.590 0.80

Knowledge acquisition—manufacturing processes

Knowledge acquisition—cultures and tastes 0.779 Knowledge acquisition—management 0.672