Description
With asymmetries in resource contributions and uncertainty regarding local operations, the degree of
operating autonomy given to a venture is a frequent source of conflict between JV parents. To what
extent can JV managers decide for themselves, and when do they need parental approval? We analyze
this pivotal question drawing on the resource dependence theory to explain how much autonomy was
provided to Chinese-foreign JVs. We find that resource dependence on foreign parents' contributions
provided a stronger explanation to JV operating autonomy than that of Chinese parents' contributions e
the local parent allowed a higher level of autonomy to its JV in comparison to the foreign parent.
Operating autonomy in Chinese-foreign joint ventures
Wei Yang
a, *
, Kathryn Rudie Harrigan
b
a
Department of Management, Nankai Business School, Nankai University, Tianjin, China
b
Management Division, Graduate School of Business, Columbia University, New York, USA
a r t i c l e i n f o
Article history:
Received 4 April 2013
Accepted 11 February 2015
Available online 24 June 2015
Keywords:
Operating autonomy
Resource dependence theory
JV
China
a b s t r a c t
With asymmetries in resource contributions and uncertainty regarding local operations, the degree of
operating autonomy given to a venture is a frequent source of con?ict between JV parents. To what
extent can JV managers decide for themselves, and when do they need parental approval? We analyze
this pivotal question drawing on the resource dependence theory to explain how much autonomy was
provided to Chinese-foreign JVs. We ?nd that resource dependence on foreign parents' contributions
provided a stronger explanation to JV operating autonomy than that of Chinese parents' contributions e
the local parent allowed a higher level of autonomy to its JV in comparison to the foreign parent.
© 2015 College of Management, National Cheng Kung University. Production and hosting by Elsevier
Taiwan LLC. All rights reserved.
1. Introduction
The appropriate level of autonomy for subsidiaries of multina-
tional companies (MNCs) is an enduring and controversial topic.
Conventionally, MNC headquarters is the center of making strategic
decisions for its subsidiaries (Chandler, 1962). An implicit
assumption in this line of thinking is that the MNC headquarters
has the best knowledge of strategic mapping for all of its sub-
sidiaries. It is also assumed that this top-down approach is more
effective in coordinating and integrating resources across sub-
sidiaries worldwide (Mintzberg, 1979). More recent research on the
MNC-subsidiary relationship suggests that subsidiaries should be
active players in formulating and implementing subsidiary actions
which collectively shape the MNC global strategy (Bartlett &
Ghoshal, 1989; Birkinshaw & Morrison, 1995; Clark & Geppert,
2011; Taggart, 1997). According to this view, autonomous sub-
sidiaries can (1) respond faster to local competitive requirements
than the headquarters of?ce can (Chung &Beamish, 2005; Prahalad
& Doz, 1987), (2) enable useful knowledge generation and acqui-
sition more effectively (Gupta & Govindarajan, 1991; Zhao, Anand,
& Mitchell, 2005), and (3) in?uence development of a more
appropriate strategic orientation for the entire MNC (Birkinshaw &
Hood, 2000). Thus, autonomous subsidiaries are often superior in
making appropriate strategic decisions consistent with the ulti-
mate aim of improving MNC strategy (O'Donnell, 2000).
This shift of perspectives has altered views concerning the
dynamismof the MNC headquarters-subsidiary relationship as well
as expanded the importance of the autonomy dimension of
research concerning decision-making within MNC subsidiaries.
When the MNC subsidiary under observation also shares equity
with a local ?rm (to wit, when the subsidiary is an equity JV) re-
searchers have often focused on structural questions concerning
the organizational form instead of looking at autonomy issues
(Butler &Sohod, 1995; Lyles &Reger, 1993). JV autonomy has been a
neglected topic in JV studies perhaps because emphasis on parent
goal achievement has directed research interests towards studying
how JVs can be controlled to serve the best interest of its parents
(Geringer &Hebert, 1989; Yang, 2011). This emphasis, however, has
left us with limited knowledge of how an active, relatively-
independent JV can best contribute to JV success.
Prior research has examined the determinants of JV decision
making, and suggested that equity ownership is an effective pre-
dictor of decision making as equity ownership gives JV parents
legitimate authority over the JV (Lyles & Reger, 1993; Yan & Gray,
2001). However, investigations on the link between equity
ownership and JV decision making have mixed up concepts and
subsequent results, such as using equity share as a proxy of parent
control (Blodgett, 1991) or as a proxy of the parent's resource
commitments (Anderson & Gatignon, 1986), or using the parent's
resource contribution as a proxy of reduced JV autonomy (Robins,
* Corresponding author. Department of Management, Nankai Business School,
Nankai University, Baidi Road, Nankai District, 300071, Tianjin, China.
E-mail address: [email protected] (W. Yang).
Peer review under responsibility of College of Management, National Cheng
Kung University.
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Asia Paci?c Management Review 20 (2015) 241e251
Tallman, & Fladmoe-Lindquist, 2002). Yet, equity, resource contri-
bution and JV autonomy are in fact separate concepts and their
relationship may not be readily evident. More research is needed to
investigate how the JV develops its autonomy status and what
determines the level and area of JV autonomy.
To address these theoretical and empirical gaps, we develop a
model associating parent ?rms' equity stakes and resource contri-
butions with JV operating autonomy and suggest that these two
factors are important for explaining JV operating autonomy. In
particular, resource contributions enhance the bargaining power of
the parent on relevant decisions, which may constrain the JV au-
tonomy on these decisions. The critical position of equity and re-
sources in in?uencing JV decisions allows us to ?nd a small number
of factors that can predict JV operating autonomy.
JV operating autonomy concerns the JV's freedom to make de-
cisions over key areas of operations. We consider the case that the
JV is an independent entity that has the capacity and desire for its
own decision-making (Lyles & Reger, 1993). Beyond the traditional
distinction between strategic and operational decisions in prior
studies (e.g., Newburry, Zeira, & Yeheskel, 2003), we focus on
several key decision areas on which the JV can adjust its autonomy
status.
We further propose that JV decision-making responsibility
varies e depending on whether the transfer of decision-making is
fromits local parent or fromits foreign parent. Gaps in institutional
environments may induce differences in the parents' ways of
decision-making and in the areas of their transfer of decision-
making responsibility to their JV (Hennart & Larimo, 1998; North,
1990). We discuss autonomy of JVs that are located in an
emerging market, China, whereby a local Chinese parent ?rm col-
laborates with a foreign ?rm from an advanced economy. China is
rampant with JV activities which are characterized with unbal-
anced parental contribution of resources, knowledge, and skills
(Beamish, 1993). This asymmetry may attribute peculiarity to JV
autonomy in China that is different from JVs in more developed
economies (Newburry & Zeira, 1999). The Chinese market is char-
acterized by institutional stringency, regulatory ambiguity, struc-
tural uncertainty, and a weak legal system (Meyer, 1998), which
require foreign partners to reduce external dependence on re-
sources while enhancing intra-organizational reliance on resources
to alleviate market threats (Luo, 2003). Hence, foreign partners are
more likely to control the JV decisions related to their internally
transferred resources. Rather than look at JV autonomy as a com-
posite whole, we emphasize the relative level of autonomy that the
Chinese parent and the foreign parent allow their JV to have. We
claim that, compared to local partners, foreign partners are more
likely to rely on internal resources and control the use of these
resources in the JV, so the amount of autonomy experienced by JVs
with each parent can be predicted at best with asymmetrical
accuracy.
We contribute to the literature in two major ways. First, we
extend resource dependence theory to address the interdepen-
dence relationship between parent companies and the JV. We
maintain that autonomy is multiple, dyadic relationships between
the JV and each of its major parents. In other words, the JV forms
with each parent a resource-interdependence relationship, which
determines the JV's autonomous status vis- a-vis the parent. This
extension offers a new and enriched perspective to understanding
the multi-party relationship of the JV. Second, we examine pre-
dictors e equity and resource contribution e of operating auton-
omy and distinguish parental differences in allowing various levels
of operating autonomy to the JV. In an emerging market context,
Chinese and foreign parents differ in their dependence on internal
and external resources to manage environmental uncertainties,
hence the parental choice in resource utilization determines the
level of autonomy each parent allows the JV to have. Contextual
characteristics of the emerging market provide an opportunity to
test and enrich the existing theory from new angels.
2. Theory and hypotheses
The resource dependence view regards resource dependence to
be the precondition for setting up a JV between parent ?rms;
resource dependence also affects the extent of each parent's
involvement in JV decisions (Blodgett, 1991; Butler & Sohod, 1995;
Kumar & Seth, 1998; Robins et al., 2002). We believe that operating
autonomy should be driven by the JV's reliance on resources.
Reversely, JV's independence from parent resources allows it to
make autonomic decisions, and circumvent the in?uence of the
parents.
Resource dependence theory views an organization's search for
resources in relation to other organizations with which it competes
for and exchanges resources (Aldrich, 1971). Since resource acqui-
sition is the driving force behind inter-organizational transactions
(Pfeffer & Salancik, 1978), resource dependence theory assumes
that organizations are re-shaping themselves through constantly
acquiring and exchanging resources e such as products and ser-
vices, information and capital e with other parties because the
entity cannot be self-suf?cient (Aldrich, 1976).
In some situations, organizations must rely on a small number of
parties for key resources. This increases the intensity of depen-
dence of an organization on the parties that provide those re-
sources e which limits the organization's ?exibility and self-
determination capacity while it increases uncertainties related to
the environment (Pfeffer &Salancik, 1978). The less-powerful party
can change its relative power status, for example, by absorbing
organizational interdependence through participation in a JV
(Pfeffer & Salancik, 1978). JVs are formed to link, stabilize and
manage a focal organization's resource dependence on other or-
ganizations (Pfeffer & Nowak, 1976). To this end, JVs facilitate the
exchange of information and pooling of personnel and resources
(Harrigan, 1986; Killing, 1983). JVs are used therefore to absorb
resources from both parents, thereby reducing competition for
resources and uncertainty for each parent company. Note that the
JV is considered to be a response to environmental requirements
(i.e., to manage interdependence), while the JV does not itself create
organizational interdependence (Pfeffer & Nowak, 1976). The cen-
ter of discussion in this theory has been the parent companies; the
relationship between a JV and its parent companies has not been
discussed.
We extend resource dependence theory beyond the parent-
centric perspective of resource-sharing between collaborating
partners to the inclusion of the JV in the decision-making rela-
tionship. We hold that examining the interdependence relationship
between the respective parent companies and their JV offers a new
and enriched perspective to understanding the multi-party rela-
tionship of the JV; in particular, it opens the path of seeing the JV as
a separate company seeking for decision autonomy. Two di-
mensions emutual dependence and power imbalance eprovide us
with further insight pertaining to inter-?rm relationships (Casciaro
& Piskorski, 2005).
2.1. Mutual dependence
Mutual dependence between parties is a property of social re-
lations (Emerson, 1962). While party B depends on party A to
achieve B's goals, A simultaneously depends on B's actions to ach-
ieve A's goals. Interdependence between organizations is not only a
consequence of transaction (Pfeffer & Salancik, 1978), but also a
structure that maintains the transaction relationship. The JV
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 242
establishes interdependence with its parents through the exchange
of resources. The JV's parents invest capital, technology, and other
tangible and intangible resources in the JV in exchange for equity
ownership, dividends, JV outputs, and improved knowledge
(Harrigan & Newman, 1990; Lyles & Reger, 1993). The JV depends
heavily on its parents for ?nancing, followed by research and
development (R&D), marketing expertise, production processes
and product design (Butler & Sohod, 1995). JV parents are depen-
dent on the JV for activities such as production processes and
marketing (Butler & Sohod, 1995).
Mutual dependence on resources provides incentive and
legitimacy for the JV management and the parents to practice
control over their concerned decision areas in the JV. The re-
sources contributed by the JV parents are strategic resources that
concern the existence and running of the JV (e.g., capital), which
are linked to more general and strategic-level decisions (e.g.,
dividend distribution). According to Johnson, Scholes, and
Whittington (2008), strategic decisions affect the long term di-
rection of an organization, concern the scope of an organization's
activities, aim at achieving advantage for the organization, and
build on an organization's resources and competences. While the
JV puts more operational stake in its relationship with the par-
ents, which is accumulated in the process of JV operations
relating to production, sales and marketing, import and export.
Thus the JV has a stronger say on operational decisions (e.g.,
import pricing), which concern day-to-day operation. Prior
studies found that JV parents tend to centralize strategic de-
cisions while the JVs have more freedom to make operational
decisions (Newburry et al., 2003), which is consistent with our
hypotheses but we offer ?ner granularity. In the context of
Chinese-foreign JVs, we question whether the traditional division
of decision making is still true. Thus we have:
H1a. In the case of Chinese-foreign JVs, parent companies will
have more in?uence on strategic decisions than their JV.
H1b. In the case of Chinese-foreign JVs, the JV will have more
in?uence on operational decisions than its parents.
According to Mintzberg (1979), “… no type of decision is inher-
ently strategic; decisions are strategic only in context” (p. 60). We
further scrutinize theJVoperatingautonomyonkeydecisions beyond
the strategic e operational division. In other words, the operating
autonomy relates to key decisions that do not have a clear-cut
distinction between strategic and operational. Following Butler and
Sohod (1995), JV operating autonomy is de?ned as “the extent to
whichjoint-ventures havethefreedomtomakedecisions over certain
key areas of their operations” (p. 161). Thus, rather than categorize
actions taken as strategic and operational decisions and make a
generalization of their patterns, we investigate how certain key de-
cisions can be in?uenced by a small number of factors, and what
differences exist in the JV's operating autonomy as permitted by the
Chinese parent and by the foreign parent respectively and why.
Due to the high uncertainty and complexity of operating a JV
in China (Luo, Shenkar, & Nyaw, 2001), the allocation of
decision-making authority between the JV and its respective
parents may vary (Glaister, Husan, & Buckley, 2003). The foreign
parent may reduce its dependence on local resources and
transfer internal resources to the JV to control the JV's key de-
cisions (Luo, 2003). In contrast, the Chinese parent may be more
willing to keep free hands over JV decisions due to its familiarity
and experience in the local environment. Rather than keep a
close look at the JV operation, it may be more ef?cient for the
Chinese parent to leave the decisions to the JV management or
the foreign partner, and instead focus on outcomes for the
monitoring purpose.
2.2. Power imbalance
In the presence of mutual dependence, the extent to which each
party can control or in?uence those activities that the other values
will determine the power status of the respective party (Emerson,
1962). The JV structure creates two forms of power imbalance.
First, the parents may not have equal power in the JV. This can
result from the parents' asymmetric investment in equity stakes
and unequal contribution of salient resources (Blodgett, 1991;
Lecraw, 1984). Second, compared with its parent companies, the
JV has weak power due to its subordinate position to the parents.
This imbalance stands out in particular during the initial stages of
the JV, when the venture is dependent on its parents for most
salient resources; the JV may only acquire salient resources and
develop salient capabilities through experience as it grows (Zhang
& Li, 2001). Although the JV's reliance on its parents can diminish
over time (Prahalad &Doz, 1981), the static viewwe impose for our
analyses argues that ownership structure and salient resource
contributions will determine the parents' decision-making re-
sponsibilities and thus affect the JV's operating autonomy. In the
following two sub-sections (equity structure and resource contri-
butions), we focus on these hypothesized determinants of the JV-
parent power relationship.
2.3. Equity structure
Equity sharing between JV partners may lead to the division of
JV decision-making, and subsequently give room for JV autonomy.
As the ?ip side of autonomy, parent control informs us about the
extent to which JV autonomy is allowed. Local parent control and
foreign parent control are separate constructs e each parent may
have a different peculiar control relationship with the JV (Chen,
Park, & Newburry, 2009; Luo et al., 2001). Environmental differ-
ences between the JV and its parent enhance the uncertainties for
the parent in achieving its goals vis- a-vis the JV (Hedlund, 1984). In
order to reduce such uncertainties and enhance its power in JV
decision making, the distant parent may try to impose tighter
control over key JV decisions by increasing its proportion of equity
ownership (Child & Yan, 1999).
In contrast, familiarity with the local market and geographical
proximity give local parents con?dence in their capability of over-
seeing, controlling, and managing the JV. The local parent may
bene?t from the protection of the host government, which can
wield its authority to issue regulations and control market access
(Luo et al., 2001). Thus, the local parent has less need to impose
tighter control by increasing equity ownership. Though consider-
able attention has been given to the misuse of the MNC's pro-
prietary technology by local partners (e.g., Luo, 2007), we argue
that prior research probably has over-emphasized opportunistic
behavior while in practice Chinese ?rms may not appropriate
partner proprietary knowledge. Weak absorptive capacity incurred
by low technology competences may prevent Chinese ?rms from
taking in technological knowledge brought by foreign partners
(Lane, Salk, & Lyles, 2001).
Our interviews also suggest that many Chinese partners were
not keen on gaining proprietary knowledge of the foreign partners;
instead, they took the JV as a pro?t-making instrument which they
could allow considerable autonomy. As a foreign JV manager
commented, “our Chinese parent has no interest in the daily operation
of the JV e what it cares is the ?nancial outcome”. This indicates that
the Chinese partner is reluctant to take the time and effort to
accumulate technological knowledge and managerial skills beyond
immediate ?nancial returns. In summary, the Chinese parent is
more inclined to leave operating autonomy to the discretion of JV
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 243
managers because it is satis?ed with outcome-based performance
evaluations. Thus, we suggest:
H2. In the case of Chinese-foreign JVs, greater equity ownership
by the foreign parent will weaken the JV's operating autonomy; in
contrast, greater equity ownership by the Chinese parent will
strengthen the JV's operating autonomy.
2.4. Resource contributions
By Brooke's (1984, p. 58) de?nition, power refers to “the attri-
butes or resources which enable the authority to be exercised”. The
sponsoring parent that interacts more with the JV is able to exert
more in?uence on the latter (Emerson, 1962). This power to in?u-
ence decisions is a resource-based power rather than a structural
power which is related to corporate hierarchies (Birkinshaw &
Ridderstrale, 1999; Karhunen, Lofgren, & Kosonen, 2008; Yan &
Child, 2002). Sponsoring ?rms expect that the higher percentage
of input resources coming froma particular parent eand the higher
percentage of sales going to that parent e the lower the autonomy
of the JV vis- a-vis those resources (Barden, Steensma, & Lyles,
2005; Garnier, 1982; Hill & Hellriegel, 1994).
The parent ?rmthat contributes salient resources has the power
to enforce its decisions pertaining to the contributed resources
(Chen et al., 2009; Hill & Hellriegel, 1994). Mjoen and Tallman
(1997) claimed that the more strategic resources a parent ?rm
contributes, the more likely it would have greater control. In
contrast to the Chinese parent that contributes more general re-
sources such as industrial experience and knowledge of business
culture, the foreign parent often contributes more knowledge-
based resources such as technological and organizational skills
that are typically scarce, proprietary and inimitable in the devel-
oping country (Luo et al., 2001; Yan & Gray, 1994). Knowledge-
based resources require the parent ?rm to be directly involved in
JV operations to facilitate resource transfer (Chen et al., 2009;
Gupta & Govindarajan, 1991). This close interaction enhances the
capability of the parent ?rm to monitor JV operations.
According to the interviewee of a Swedish medical equipment
company, “we (the Swedish partner) bring all the key equipment to
manufacture inthe JV. We want tomake sure the entire qualitystandardis
met, and our product is reliable as if it is produced in Sweden”. Moreover,
the foreign parent may also be concerned about the suboptimal use of
its technology by the JVandmisappropriationof the technology by the
local partner (Mjoen&Tallman, 1997). Sothe foreignparent is inclined
to protect the speci?c critical resources it contributes to the JV
(Beamish & Banks, 1987; Li, Zhou, & Zajac, 2009; Newburry & Zeira,
1999). Hence, the JV will have less operating autonomy.
In contrast, the Chinese parent is less keen on exerting in?uence
on making operational decisions. Property-based resources are
well-de?ned assets that correspond to clear property rights
(Barney, 1991), which allow an unambiguous evaluation of the
market value of such assets (Chen et al., 2009). With the contri-
bution of property-based resources, the Chinese parent can leave
functional decisions to the JV management and focuses on out-
comes. Furthermore, environmental and cultural closeness trumps
resources in the case of the Chinese parent which can relinquish
decision-making to the JV's management; the foreign parent ex-
ercises its decision-making in?uence by adjusting the resources
contributed. We suggest:
H3. In the case of Chinese-foreign JVs, higher contribution of
salient resources by the foreign parent will weaken the JV's oper-
ating autonomy; in contrast, higher contribution of salient re-
sources by the Chinese parent will strengthen the JV's operating
autonomy.
3. Methodology
3.1. Sample and data collection
Our hypotheses were tested using ?eld research data collected
from 45 Sino-foreign JVs in 2007 using interviews guided by a
structured questionnaire. We interviewed one person representing
each JV, including JV general managers, deputy general managers,
and senior executives (including both expatriates and locals). JV
managers are appropriate for providing data on resource contri-
bution and decision autonomy because they are most aware of
contribution amounts and resource characteristics, and they are
most likely to understand the type and degree of decision auton-
omy that the parent ?rms permit (Chen et al., 2009; Hill &
Hellriegel, 1994).
We requested the foreign-investment membership lists pub-
lished by the Chambers of Commerce from Germany, Switzerland,
Sweden, France, U.S., Japan and Singapore. The membership lists
provided general company information as well as detailed contact
information of the JV top managers. We adopted three criteria for
the selection of a JV: (1) a JV must have at least 10 employees and
RMB 1 million in its initial equity investment; (2) a JV must have
existed for at least one year; (3) the major Chinese parent and the
major foreign parent each must have at least ?ve percent of total
equity of a JV.
Initially, we contacted some companies through emails and
posted mails; however, the response rate was extremely low. We
found that survey-based CEO research was hard to conduct in
China. Therefore, we extended our strategy of data collection using
structured interviews. With the help of some open-ended ques-
tions, these interviews enabled us to probe the respondent's in-
depth thinking and guided our interpretation of certain phenom-
ena (Schwab, 2005). As the business community in China was not
accustomed to academic collaboration, face-to-face interaction
enhanced understanding and motivated participation. So we
phoned the top managers, stated our intention, and requested an
interview. Upon receiving their agreement, we scheduled a per-
sonal meeting. In total, we selected 650 JV senior managers and
phoned them; 36 JVs were either dissolved or their managers left
the positions. 50 managers agreed to participate in the research,
but 5 managers or ?rms did not ?t our research. We obtained 45
complete interview responses, with a response rate of 7% (see
Appendix). The design of our questionnaire was modi?ed slightly
from that of Sim and Ali (1998, 2000) to adapt to the Chinese
context.
Due to the research nature that required a personal meeting
with the respondent which took him/her a large amount of time
(on average 2 h), a random sample was not possible to obtain. Also
because the respondents were senior managers who volunteered to
be interviewed, this is not a random sample developed using sub-
sample strati?cation. As an access sample, the observations have
geographical bias; instead of a sample that is representative of the
geographic distribution of the population of Chinese JVs, our
sample over-represents JVs located in Northern China.
Our sample comprised 26 Sino-European JVs, 6 Sino-U.S., and 13
Sino-Asian (foreign parents were based in Japan or Singapore). 27
JVs were foreign majority equity, 11 were Chinese majority equity,
and 7 were equal equity (50e50). The Chinese parents of 9 JVs were
state-owned enterprises (SOEs) and the rest 36 JVs were non-SOEs.
The interviews were taken with 35 JVs (77.78%) located in North/
Northeast China, 4 JVs (8.89%) in Yangtze River Delta, and 6 JVs
(13.33%) in other regions of China. The JVs represented a range of
manufacturing industries, including chemicals and pharmaceuti-
cals, machinery, electric technology, metals, and vehicle- and
airplane construction, as well as services.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 244
We compared our sample ?rms with JVs included in the Annual
Industrial Survey Database (2006) of the Chinese National Bureau of
Statistics. This database is one of the most comprehensive indus-
trial surveys published and includes information on all state-
owned enterprises (SOEs), and non-SOEs including foreign-
invested ?rms with annual sales exceeding RMB 5 million
(approximately US$ 640,000 according to the of?cial 2006 ex-
change rate). Firm demographic information and key ?nancial data
are included in the database. This database has been used in prior
studies such as Buckley, Clegg, and Wang (2002), and Chang and Xu
(2008). 301,961 ?rms are included in the database in 2006, among
which 13,256 ?rms (4.39%) are JVs. Among all the JVs, the
geographical locations are as follows: 2366 JVs (17.85%) were
located in North/Northeast China, 5722 JVs (43.17%) in Yangtze
River Delta, and the rest 5168 JVs (38.99%) elsewhere. We compared
our sample JV ?rms and non-responding ?rms with the JVs
included in the industrial database on sales and the number of
employees. No signi?cant differences were found between the
three sets of ?rms on these criteria at p < 0.05.
3.2. Measures: dependent variable
3.2.1. JV autonomy
Following prior autonomy research, we adopted a dyadic view
between JV autonomy and parent control for decision-making
(Garnier, Osborn, Galicia, & Lecon, 1979; Newburry & Zeira, 1999;
Taggart & Hood, 1999). We assumed that the JV operated be-
tween the extremes of being fully-autonomous and fully-
controlled. The interviewed JV executives were asked to assess
the extent to which various decisions (as listed below) were made
by the JV and one (or both) of its parent(s). Each decision was coded
using a scale in which “1” indicated that a decision was exclusively
made by the JV, and “5” indicated that a decision was made
exclusively by one (or both) parent(s). The signs on the coef?cients
in autonomy regressions will be reversed. Brie?y, because “1” refers
to high JV autonomy and “5” refers to tight parental control, a
positive sign on coef?cients where autonomy is the dependent
variable means high parental control (or low JV autonomy) and
when a coef?cient is negative where autonomy is the dependent
variable, it means low parental control (or high JV autonomy).
Operating autonomy was measured by the types of decisions.
Similar to the measures used by Garnier (1982), 11 types of strategic
and operational decisions were selected to evaluate the JV's degree
of operating autonomy. Strategic decisions included production
technology, quality standards, ?nancing sources, dividend distri-
butions, and selection, promotion & compensation of executives.
Operational decisions included production schedules, product
pricing, advertising and promotion, distribution channels, import
sourcing, and import pricing.
3.3. Measures: independent variables
3.3.1. Equity structure
Equity measured the present percentage of equity in the JV
owned by the Chinese parent (Chinese parent equity) and the
foreign parent (foreign parent equity).
3.3.2. Resource contributions of the parents
Seven types of resource contributions of the sponsoring ?rms to
their JV were considered: product and process technology; tech-
nical personnel; management personnel; distribution channels;
materials and components; capital and ?nance; and access to target
market. The interviewed JV executive was asked to assess (1) the
percentage of contribution (ranging from 0% to 100%) made by the
Chinese parent and the foreign parent of each of the diverse
resource areas (the combined percentage of parental contribution
could not exceed 100%), and (2) the relative importance of each of
the seven resource areas to the JV's operations. (The importance of
each resource contributed was coded using a scale in which “1”
indicated that a resource was not important at all, and “5” indicated
that a resource was very important.)
Responses to the questions about relative importance of a
particular contributed resource were weighted by dividing each
response by the total of responses to all the 7 resource areas. The
resulting weighted importance of each contributed resource was
multiplied by responses to each question pertaining to the pro-
portional resource contributions of the Chinese parent and the
foreign parent to create two indices for each contributed resource e
one for each parent.
3.4. Control variables
3.4.1. JV size
We controlled JV ?rm size. In operation, the logarithmic trans-
formation of the JV's sales volume in 2006 was used to represent
the ?rm size.
3.4.2. JV age
JV age was measured in terms of number of years the JV was in
operation.
3.4.3. Number of parents
We controlled the number of sponsoring parents.
3.4.4. Respondent association
We also controlled respondent association regarding whether
the respondent was local or expatriate. It was used as a dummy
variable, with the respondent appointed by the local Chinese
parent being assigned with a value of 0, and the respondent
appointed by the foreign parent assigned with a value of 1.
3.4.5. Industry
JV industry was controlled using a dummy variable, with 1 for
manufacturing; otherwise, 0 for services. The level of industry re-
striction was also controlled using a dummy, with 1 for a restrictive
industry; otherwise, 0 for a non-restrictive industry.
3.4.6. Cultural similarity
Cultural similarity was controlled using a dummy variable, with
1 for the culture of the foreign parent similar to that of the host
Chinese parent (i.e., Asian culture); otherwise, 0 for other cultures
(i.e., non-Asian cultures).
3.5. Model speci?cation
Following the methodology used by Yan and Child (2002) on a
similarly small sample, a regression model was chosen to estimate
the effects of equity structure, and resource contributions of the
parents on JV autonomy. Our relatively small sample size would
decrease the occurrence of Type I errors or the likelihood of falsely
accepting the study's hypotheses (Speed, 1994). An alternative
treatment of the data could be a factor analysis procedure pro-
ducing scaling that could be used in subsequent regression models.
But because the individual contributions of each class of predictor
variable (indicated by their standardized beta coef?cients) were of
interest, factor analysis was not used.
The model for H2 and H3 could be expressed as:
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 245
JV operating autonomy ¼ a þðb
1
x EquityÞ
þðb
2
x Resource contributionÞ
þðb
3
x JV sizeÞ þðb
4
x JV ageÞ
þðb
5
x Number of parentsÞ
þðb
6
x Respondent associationÞ
þðb
7
x JV industryÞ
þb
7
x Industry restriction
þb
8
x Cultural similarity (1)
where JV operating autonomy represents autonomy in each of
the 11 types of decisions, and resource contribution represents each
of the 7 types of resources.
4. Results
4.1. Strategic versus operational decisions
Table 1 reports the results of t-test statistics used to test the level of
autonomy of JV decisions. Decisions with an average score above 3.0
were considered to be more centralized, while those scoring an
average below 3.0 were more autonomous. Table 1 reports that
several strategic decisions (dividend distribution, selection, promo-
tion &compensation of executives, ?nancing sources) made centrally
by parent companies were statistically-signi?cant (p < 0.05 or less)
and had the expected high scores; other decisions de?ned as ‘stra-
tegic’ in prior studies e production technology, quality standards e
were statistically non-signi?cant, sowere likelymadethroughmutual
consultation between the JV and its parents, suggesting partial sup-
port for Hypothesis 1a. Table1reports that someoperational decisions
(e.g., production schedules) made by the JV were statistically-
signi?cant (p < 0.05 or less) and had the expected low scores; the
remainingdecision, import pricing, whichwas de?nedas ‘operational’
in prior studies, showed little statistically-signi?cant difference from
the median point of 3.0, suggesting partial support for Hypothesis 1b.
Results are generally consistent with previous research that
found that JVs were more inclined to make operational decisions,
while strategic decisions were made by parent ?rms. In particular,
results indicate that JVs had decision-making autonomy in de-
cisions pertaining to the production and marketing functions, while
parent ?rms controlled ?nancing and top management issues. The
mixed results (expressed by statistically signi?cant and non-
signi?cant results) suggest that not all operational decisions were
made by JV management; nor were all strategic decisions made by
its parents. Results indicate that parent ?rms participated in
operational decisions that had strategic implications and their JV
participated in strategic decisions that had strong operational im-
plications. For example, decisions related to production technology
were taken as strategic decisions due to their high sensitivity to the
parent that brought in the technology. Imposing tight control on
production technology could prevent the other partner from
opportunistic behavior. But production technology concerns day-
to-day operations of the JV, and the management could exploit
new technology while adapting it for local use. To reach such a
balance between national adaptation/responsiveness and the
achievement of global strategy/ef?ciency, the JV and parents have
to be exposed to continuous “bargaining” to in?uence decision-
making (Bartlett & Ghoshal, 1989). Thus, it is of our interest to
examine further the determinants of autonomy of these ‘in-be-
tween’ decisions that are not strictly strategic or operational.
4.2. Equity structure
Table 2 presents descriptive statistics and correlations of the
variables useful for the following multiple regression analyses.
Table 3 and Table 4 report the results of regressions used to test
the effects of equity on JV autonomy in production technology,
import pricing and quality standards. A positively-signed coef?-
cient would be interpreted that a high proportion of equity held by
a parent would correspond to a high level of parent control (i.e., low
JV operating autonomy) vis- a-vis certain decisions; reversely, a
negatively-signed coef?cient would be interpreted that a high
proportion of equity held by a parent would correspond to a low
level of parent control (i.e., high JV operating autonomy) vis-a-vis
certain decisions. It indicates support for Hypothesis 2 regarding
the positive relationship between high equity proportions held by
the foreign parent and high level of parent control (i.e., low JV
operating autonomy) for the decision on production technology;
the coef?cient sign is as expected and the result is statistically-
signi?cant for production technology (b ¼ 3.200, p < 0.001).
Hypothesis 2 also predicted a negative relationship between pro-
portions of equity held by the Chinese parent and low parent
control (i.e., high JV autonomy) over the production technology,
import pricing and quality standards decisions; the coef?cient
signs are as expected and the results are statistically-signi?cant for
production technology (b ¼ À3.029, p < 0.01) and import pricing
(b ¼ À2.049, p < 0.05). Thus, Hypothesis 2 is partially supported.
4.3. Resource contributions
Tables 3 and 4 report the results of regressions used to test the
effects of resource contributions on JV autonomy in production
technology, import pricing and quality standards. A positively-
signed coef?cient would be interpreted that a high level of
Table 1
Strategic and operational decisions in JVs.
Mean S.d. t
a
Dividend distributions
b
4.13 1.185 5.372***
Selection, promotion & compensation of executives
b
3.80 1.487 3.466***
Financing sources
b
3.47 1.319 2.010*
Production technology
b
3.18 1.570 0.665
Quality standards
b
3.12 1.691 0.412
Import pricing 2.60 1.418 À1.668
Import sourcing 2.48 1.439 À2.057*
Product pricing 2.29 1.412 À3.101**
Distribution channels 2.14 1.508 À3.007**
Advertising & promotion 2.09 1.463 À3.698***
Production schedules 1.85 1.349 À4.903***
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
Test value ¼ 3.0; 2-tailed tests.
b
Indicates strategic decisions.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 246
Table 2
Descriptive statistics and Pearson correlation matrix.
Variables Mean S.d. 1 2 3 4 5 6 7 8 9 10 11 12 13
1 JV size 7.88 0.89
2 JV age 8.76 5.39 0.53***
3 Number of parents 2.56 1.01 À0.04 0.25
4 Respondent association 0.42 0.50 À0.16 À0.26 À0.34*
5 JV industry 0.78 0.42 0.15 À0.08 À0.18 0.02
6 Industry restriction 0.20 0.40 0.34* 0.04 À0.22 0.14 À0.27
7 Cultural similarity 0.29 0.45 À0.12 0.03 0.19 0.05 0.11 À0.20
8 Chinese parent equity 0.35 0.20 À0.04 0.14 0.02 0.07 À0.26 0.02 À0.03
9 Foreign parent equity 0.60 0.24 0.09 À0.19 À0.30* 0.06 0.24 0.07 0.02 À0.88***
10 Chinese parent's contribution in product
& process technology
0.02 0.03 À0.07 À0.19 À0.13 À0.00 0.14 0.20 0.09 0.26 À0.36
11 Foreign parent's contribution in product &
process technology
0.08 0.06 À0.08 À0.13 0.12 0.17 À0.30 0.07 0.05 À0.28 0.30 À0.52
12 JV autonomy in production technology 3.18 1.57 0.18 À0.12 0.03 À0.02 À0.30 À0.01 À0.06 À0.45** 0.50** À0.29 0.18
13 JV autonomy in import pricing 2.60 1.42 À0.24 À0.14 À0.12 0.09 0.28 À0.28 0.00 À0.39* 0.31 À0.25 0.30 0.26
14 JV autonomy in quality standards 3.12 1.69 0.20 À0.04 0.04 À0.02 À0.20 À0.19 0.17 À0.08 0.08 À0.53** 0.49* 0.58*** 0.39*
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
Table 3
Regression model for operating autonomy in production technology and import pricing.
a
Operating autonomy in production technology Operating autonomy in import pricing
Control variables
JV size 0.675
b
(0.337) 0.615
b
(0.306) 0.559
b
(0.297) À0.222 (0.312) À0.264 (0.298) À0.315 (0.304)
JV age À0.082
b
(0.047) À0.063 (0.044) À0.058 (0.042) À0.001 (0.044) 0.009 (0.043) 0.018 (0.043)
Number of parents 0.045 (0.237) 0.014 (0.215) 0.233 (0.215) À0.220 (0.220) À0.240 (0.210) À0.182 (0.220)
Respondent association 0.007 (0.456) 0.128 (0.416) 0.155 (0.405) 0.155 (0.423) 0.229 (0.406) 0.106 (0.415)
JV industry À0.728 (0.558) À1.048
b
(0.541) À1.100* (0.508) 0.121 (0.517) À0.044 (0.528) 0.141 (0.520)
Industry restriction À0.628 (0.615) À0.659 (0.582) À0.707 (0.538) À0.853 (0.571) À0.807 (0.568) À0.876 (0.550)
Cultural similarity À0.079 (0.472) À0.094 (0.433) À0.182 (0.414) À0.118 (0.438) À0.103 (0.422) À0.202 (0.424)
Main effects
Chinese parent equity À3.029** (1.022) À2.049* (0.997)
Foreign parent equity 3.200*** (0.873) 1.183 (0.894)
Chinese parent's contribution in product &
process technology
À3.197 (8.891) À5.942 (8.673)
Foreign parent's contribution in product &
process technology
À3.436 (4.125) 5.379 (4.223)
Model F 0.771 1.846* 2.288* 0.903 1.410
b
1.293
Adjusted R
2
À0.038 0.148 0.209 À0.016 0.077 0.057
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
The entries in the table are unstandardized coef?cients. Standard errors in parentheses.
b
p < 0.10.
Table 4
Regression model for operating autonomy in quality standards.
a
Operating autonomy in quality standards
Control variables
JV size 0.918* (0.337) 0.906* (0.331) 0.876* (0.345)
JV age À0.075 (0.047) À0.086
b
(0.048) À0.066 (0.049)
Number of parents À0.070 (0.238) À0.069 (0.233) À0.077 (0.250)
Respondent association 0.061 (0.457) 0.037 (0.451) 0.004 (0.471)
JV industry À1.193* (0.559) À0.986 (0.585) À1.116
b
(0.590)
Industry restriction À1.479* (0.616) À1.182
b
(0.630) À1.481* (0.625)
Cultural similarity 0.621 (0.473) 0.733 (0.469) 0.582 (0.481)
Main effects
Chinese parent equity À0.217 (1.107)
Foreign parent equity 0.246 (1.015)
Chinese parent's contribution in product & process technology À17.096
b
(9.626)
Foreign parent's contribution in product & process technology 4.188 (4.795)
Model F 1.695 1.773
b
1.400
Adjusted R
2
0.100 0.136 0.076
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
The entries in the table are unstandardized coef?cients. Standard errors in parentheses.
b
p < 0.10.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 247
resource contributions would correspond to a high level of parent
control (i.e., lowJV autonomy) vis- a-vis certain decisions; reversely,
a negatively-signed coef?cient would be interpreted that a high
level of resource contributions would correspond to a low level of
parent control (i.e., high JV autonomy) vis- a-vis certain decisions.
We only found support to Hypothesis 3 for one resource-autonomy
relationship, which is reported below.
There is a negative relationship between the Chinese parent's
high resource contributions in product and process technology and
its low levels of control (i.e., high JV autonomy) in making quality
standards decisions; the coef?cient signs are as expected and results
are statistically-signi?cant (b ¼À17.096, p
With asymmetries in resource contributions and uncertainty regarding local operations, the degree of
operating autonomy given to a venture is a frequent source of conflict between JV parents. To what
extent can JV managers decide for themselves, and when do they need parental approval? We analyze
this pivotal question drawing on the resource dependence theory to explain how much autonomy was
provided to Chinese-foreign JVs. We find that resource dependence on foreign parents' contributions
provided a stronger explanation to JV operating autonomy than that of Chinese parents' contributions e
the local parent allowed a higher level of autonomy to its JV in comparison to the foreign parent.
Operating autonomy in Chinese-foreign joint ventures
Wei Yang
a, *
, Kathryn Rudie Harrigan
b
a
Department of Management, Nankai Business School, Nankai University, Tianjin, China
b
Management Division, Graduate School of Business, Columbia University, New York, USA
a r t i c l e i n f o
Article history:
Received 4 April 2013
Accepted 11 February 2015
Available online 24 June 2015
Keywords:
Operating autonomy
Resource dependence theory
JV
China
a b s t r a c t
With asymmetries in resource contributions and uncertainty regarding local operations, the degree of
operating autonomy given to a venture is a frequent source of con?ict between JV parents. To what
extent can JV managers decide for themselves, and when do they need parental approval? We analyze
this pivotal question drawing on the resource dependence theory to explain how much autonomy was
provided to Chinese-foreign JVs. We ?nd that resource dependence on foreign parents' contributions
provided a stronger explanation to JV operating autonomy than that of Chinese parents' contributions e
the local parent allowed a higher level of autonomy to its JV in comparison to the foreign parent.
© 2015 College of Management, National Cheng Kung University. Production and hosting by Elsevier
Taiwan LLC. All rights reserved.
1. Introduction
The appropriate level of autonomy for subsidiaries of multina-
tional companies (MNCs) is an enduring and controversial topic.
Conventionally, MNC headquarters is the center of making strategic
decisions for its subsidiaries (Chandler, 1962). An implicit
assumption in this line of thinking is that the MNC headquarters
has the best knowledge of strategic mapping for all of its sub-
sidiaries. It is also assumed that this top-down approach is more
effective in coordinating and integrating resources across sub-
sidiaries worldwide (Mintzberg, 1979). More recent research on the
MNC-subsidiary relationship suggests that subsidiaries should be
active players in formulating and implementing subsidiary actions
which collectively shape the MNC global strategy (Bartlett &
Ghoshal, 1989; Birkinshaw & Morrison, 1995; Clark & Geppert,
2011; Taggart, 1997). According to this view, autonomous sub-
sidiaries can (1) respond faster to local competitive requirements
than the headquarters of?ce can (Chung &Beamish, 2005; Prahalad
& Doz, 1987), (2) enable useful knowledge generation and acqui-
sition more effectively (Gupta & Govindarajan, 1991; Zhao, Anand,
& Mitchell, 2005), and (3) in?uence development of a more
appropriate strategic orientation for the entire MNC (Birkinshaw &
Hood, 2000). Thus, autonomous subsidiaries are often superior in
making appropriate strategic decisions consistent with the ulti-
mate aim of improving MNC strategy (O'Donnell, 2000).
This shift of perspectives has altered views concerning the
dynamismof the MNC headquarters-subsidiary relationship as well
as expanded the importance of the autonomy dimension of
research concerning decision-making within MNC subsidiaries.
When the MNC subsidiary under observation also shares equity
with a local ?rm (to wit, when the subsidiary is an equity JV) re-
searchers have often focused on structural questions concerning
the organizational form instead of looking at autonomy issues
(Butler &Sohod, 1995; Lyles &Reger, 1993). JV autonomy has been a
neglected topic in JV studies perhaps because emphasis on parent
goal achievement has directed research interests towards studying
how JVs can be controlled to serve the best interest of its parents
(Geringer &Hebert, 1989; Yang, 2011). This emphasis, however, has
left us with limited knowledge of how an active, relatively-
independent JV can best contribute to JV success.
Prior research has examined the determinants of JV decision
making, and suggested that equity ownership is an effective pre-
dictor of decision making as equity ownership gives JV parents
legitimate authority over the JV (Lyles & Reger, 1993; Yan & Gray,
2001). However, investigations on the link between equity
ownership and JV decision making have mixed up concepts and
subsequent results, such as using equity share as a proxy of parent
control (Blodgett, 1991) or as a proxy of the parent's resource
commitments (Anderson & Gatignon, 1986), or using the parent's
resource contribution as a proxy of reduced JV autonomy (Robins,
* Corresponding author. Department of Management, Nankai Business School,
Nankai University, Baidi Road, Nankai District, 300071, Tianjin, China.
E-mail address: [email protected] (W. Yang).
Peer review under responsibility of College of Management, National Cheng
Kung University.
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Asia Paci?c Management Review 20 (2015) 241e251
Tallman, & Fladmoe-Lindquist, 2002). Yet, equity, resource contri-
bution and JV autonomy are in fact separate concepts and their
relationship may not be readily evident. More research is needed to
investigate how the JV develops its autonomy status and what
determines the level and area of JV autonomy.
To address these theoretical and empirical gaps, we develop a
model associating parent ?rms' equity stakes and resource contri-
butions with JV operating autonomy and suggest that these two
factors are important for explaining JV operating autonomy. In
particular, resource contributions enhance the bargaining power of
the parent on relevant decisions, which may constrain the JV au-
tonomy on these decisions. The critical position of equity and re-
sources in in?uencing JV decisions allows us to ?nd a small number
of factors that can predict JV operating autonomy.
JV operating autonomy concerns the JV's freedom to make de-
cisions over key areas of operations. We consider the case that the
JV is an independent entity that has the capacity and desire for its
own decision-making (Lyles & Reger, 1993). Beyond the traditional
distinction between strategic and operational decisions in prior
studies (e.g., Newburry, Zeira, & Yeheskel, 2003), we focus on
several key decision areas on which the JV can adjust its autonomy
status.
We further propose that JV decision-making responsibility
varies e depending on whether the transfer of decision-making is
fromits local parent or fromits foreign parent. Gaps in institutional
environments may induce differences in the parents' ways of
decision-making and in the areas of their transfer of decision-
making responsibility to their JV (Hennart & Larimo, 1998; North,
1990). We discuss autonomy of JVs that are located in an
emerging market, China, whereby a local Chinese parent ?rm col-
laborates with a foreign ?rm from an advanced economy. China is
rampant with JV activities which are characterized with unbal-
anced parental contribution of resources, knowledge, and skills
(Beamish, 1993). This asymmetry may attribute peculiarity to JV
autonomy in China that is different from JVs in more developed
economies (Newburry & Zeira, 1999). The Chinese market is char-
acterized by institutional stringency, regulatory ambiguity, struc-
tural uncertainty, and a weak legal system (Meyer, 1998), which
require foreign partners to reduce external dependence on re-
sources while enhancing intra-organizational reliance on resources
to alleviate market threats (Luo, 2003). Hence, foreign partners are
more likely to control the JV decisions related to their internally
transferred resources. Rather than look at JV autonomy as a com-
posite whole, we emphasize the relative level of autonomy that the
Chinese parent and the foreign parent allow their JV to have. We
claim that, compared to local partners, foreign partners are more
likely to rely on internal resources and control the use of these
resources in the JV, so the amount of autonomy experienced by JVs
with each parent can be predicted at best with asymmetrical
accuracy.
We contribute to the literature in two major ways. First, we
extend resource dependence theory to address the interdepen-
dence relationship between parent companies and the JV. We
maintain that autonomy is multiple, dyadic relationships between
the JV and each of its major parents. In other words, the JV forms
with each parent a resource-interdependence relationship, which
determines the JV's autonomous status vis- a-vis the parent. This
extension offers a new and enriched perspective to understanding
the multi-party relationship of the JV. Second, we examine pre-
dictors e equity and resource contribution e of operating auton-
omy and distinguish parental differences in allowing various levels
of operating autonomy to the JV. In an emerging market context,
Chinese and foreign parents differ in their dependence on internal
and external resources to manage environmental uncertainties,
hence the parental choice in resource utilization determines the
level of autonomy each parent allows the JV to have. Contextual
characteristics of the emerging market provide an opportunity to
test and enrich the existing theory from new angels.
2. Theory and hypotheses
The resource dependence view regards resource dependence to
be the precondition for setting up a JV between parent ?rms;
resource dependence also affects the extent of each parent's
involvement in JV decisions (Blodgett, 1991; Butler & Sohod, 1995;
Kumar & Seth, 1998; Robins et al., 2002). We believe that operating
autonomy should be driven by the JV's reliance on resources.
Reversely, JV's independence from parent resources allows it to
make autonomic decisions, and circumvent the in?uence of the
parents.
Resource dependence theory views an organization's search for
resources in relation to other organizations with which it competes
for and exchanges resources (Aldrich, 1971). Since resource acqui-
sition is the driving force behind inter-organizational transactions
(Pfeffer & Salancik, 1978), resource dependence theory assumes
that organizations are re-shaping themselves through constantly
acquiring and exchanging resources e such as products and ser-
vices, information and capital e with other parties because the
entity cannot be self-suf?cient (Aldrich, 1976).
In some situations, organizations must rely on a small number of
parties for key resources. This increases the intensity of depen-
dence of an organization on the parties that provide those re-
sources e which limits the organization's ?exibility and self-
determination capacity while it increases uncertainties related to
the environment (Pfeffer &Salancik, 1978). The less-powerful party
can change its relative power status, for example, by absorbing
organizational interdependence through participation in a JV
(Pfeffer & Salancik, 1978). JVs are formed to link, stabilize and
manage a focal organization's resource dependence on other or-
ganizations (Pfeffer & Nowak, 1976). To this end, JVs facilitate the
exchange of information and pooling of personnel and resources
(Harrigan, 1986; Killing, 1983). JVs are used therefore to absorb
resources from both parents, thereby reducing competition for
resources and uncertainty for each parent company. Note that the
JV is considered to be a response to environmental requirements
(i.e., to manage interdependence), while the JV does not itself create
organizational interdependence (Pfeffer & Nowak, 1976). The cen-
ter of discussion in this theory has been the parent companies; the
relationship between a JV and its parent companies has not been
discussed.
We extend resource dependence theory beyond the parent-
centric perspective of resource-sharing between collaborating
partners to the inclusion of the JV in the decision-making rela-
tionship. We hold that examining the interdependence relationship
between the respective parent companies and their JV offers a new
and enriched perspective to understanding the multi-party rela-
tionship of the JV; in particular, it opens the path of seeing the JV as
a separate company seeking for decision autonomy. Two di-
mensions emutual dependence and power imbalance eprovide us
with further insight pertaining to inter-?rm relationships (Casciaro
& Piskorski, 2005).
2.1. Mutual dependence
Mutual dependence between parties is a property of social re-
lations (Emerson, 1962). While party B depends on party A to
achieve B's goals, A simultaneously depends on B's actions to ach-
ieve A's goals. Interdependence between organizations is not only a
consequence of transaction (Pfeffer & Salancik, 1978), but also a
structure that maintains the transaction relationship. The JV
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 242
establishes interdependence with its parents through the exchange
of resources. The JV's parents invest capital, technology, and other
tangible and intangible resources in the JV in exchange for equity
ownership, dividends, JV outputs, and improved knowledge
(Harrigan & Newman, 1990; Lyles & Reger, 1993). The JV depends
heavily on its parents for ?nancing, followed by research and
development (R&D), marketing expertise, production processes
and product design (Butler & Sohod, 1995). JV parents are depen-
dent on the JV for activities such as production processes and
marketing (Butler & Sohod, 1995).
Mutual dependence on resources provides incentive and
legitimacy for the JV management and the parents to practice
control over their concerned decision areas in the JV. The re-
sources contributed by the JV parents are strategic resources that
concern the existence and running of the JV (e.g., capital), which
are linked to more general and strategic-level decisions (e.g.,
dividend distribution). According to Johnson, Scholes, and
Whittington (2008), strategic decisions affect the long term di-
rection of an organization, concern the scope of an organization's
activities, aim at achieving advantage for the organization, and
build on an organization's resources and competences. While the
JV puts more operational stake in its relationship with the par-
ents, which is accumulated in the process of JV operations
relating to production, sales and marketing, import and export.
Thus the JV has a stronger say on operational decisions (e.g.,
import pricing), which concern day-to-day operation. Prior
studies found that JV parents tend to centralize strategic de-
cisions while the JVs have more freedom to make operational
decisions (Newburry et al., 2003), which is consistent with our
hypotheses but we offer ?ner granularity. In the context of
Chinese-foreign JVs, we question whether the traditional division
of decision making is still true. Thus we have:
H1a. In the case of Chinese-foreign JVs, parent companies will
have more in?uence on strategic decisions than their JV.
H1b. In the case of Chinese-foreign JVs, the JV will have more
in?uence on operational decisions than its parents.
According to Mintzberg (1979), “… no type of decision is inher-
ently strategic; decisions are strategic only in context” (p. 60). We
further scrutinize theJVoperatingautonomyonkeydecisions beyond
the strategic e operational division. In other words, the operating
autonomy relates to key decisions that do not have a clear-cut
distinction between strategic and operational. Following Butler and
Sohod (1995), JV operating autonomy is de?ned as “the extent to
whichjoint-ventures havethefreedomtomakedecisions over certain
key areas of their operations” (p. 161). Thus, rather than categorize
actions taken as strategic and operational decisions and make a
generalization of their patterns, we investigate how certain key de-
cisions can be in?uenced by a small number of factors, and what
differences exist in the JV's operating autonomy as permitted by the
Chinese parent and by the foreign parent respectively and why.
Due to the high uncertainty and complexity of operating a JV
in China (Luo, Shenkar, & Nyaw, 2001), the allocation of
decision-making authority between the JV and its respective
parents may vary (Glaister, Husan, & Buckley, 2003). The foreign
parent may reduce its dependence on local resources and
transfer internal resources to the JV to control the JV's key de-
cisions (Luo, 2003). In contrast, the Chinese parent may be more
willing to keep free hands over JV decisions due to its familiarity
and experience in the local environment. Rather than keep a
close look at the JV operation, it may be more ef?cient for the
Chinese parent to leave the decisions to the JV management or
the foreign partner, and instead focus on outcomes for the
monitoring purpose.
2.2. Power imbalance
In the presence of mutual dependence, the extent to which each
party can control or in?uence those activities that the other values
will determine the power status of the respective party (Emerson,
1962). The JV structure creates two forms of power imbalance.
First, the parents may not have equal power in the JV. This can
result from the parents' asymmetric investment in equity stakes
and unequal contribution of salient resources (Blodgett, 1991;
Lecraw, 1984). Second, compared with its parent companies, the
JV has weak power due to its subordinate position to the parents.
This imbalance stands out in particular during the initial stages of
the JV, when the venture is dependent on its parents for most
salient resources; the JV may only acquire salient resources and
develop salient capabilities through experience as it grows (Zhang
& Li, 2001). Although the JV's reliance on its parents can diminish
over time (Prahalad &Doz, 1981), the static viewwe impose for our
analyses argues that ownership structure and salient resource
contributions will determine the parents' decision-making re-
sponsibilities and thus affect the JV's operating autonomy. In the
following two sub-sections (equity structure and resource contri-
butions), we focus on these hypothesized determinants of the JV-
parent power relationship.
2.3. Equity structure
Equity sharing between JV partners may lead to the division of
JV decision-making, and subsequently give room for JV autonomy.
As the ?ip side of autonomy, parent control informs us about the
extent to which JV autonomy is allowed. Local parent control and
foreign parent control are separate constructs e each parent may
have a different peculiar control relationship with the JV (Chen,
Park, & Newburry, 2009; Luo et al., 2001). Environmental differ-
ences between the JV and its parent enhance the uncertainties for
the parent in achieving its goals vis- a-vis the JV (Hedlund, 1984). In
order to reduce such uncertainties and enhance its power in JV
decision making, the distant parent may try to impose tighter
control over key JV decisions by increasing its proportion of equity
ownership (Child & Yan, 1999).
In contrast, familiarity with the local market and geographical
proximity give local parents con?dence in their capability of over-
seeing, controlling, and managing the JV. The local parent may
bene?t from the protection of the host government, which can
wield its authority to issue regulations and control market access
(Luo et al., 2001). Thus, the local parent has less need to impose
tighter control by increasing equity ownership. Though consider-
able attention has been given to the misuse of the MNC's pro-
prietary technology by local partners (e.g., Luo, 2007), we argue
that prior research probably has over-emphasized opportunistic
behavior while in practice Chinese ?rms may not appropriate
partner proprietary knowledge. Weak absorptive capacity incurred
by low technology competences may prevent Chinese ?rms from
taking in technological knowledge brought by foreign partners
(Lane, Salk, & Lyles, 2001).
Our interviews also suggest that many Chinese partners were
not keen on gaining proprietary knowledge of the foreign partners;
instead, they took the JV as a pro?t-making instrument which they
could allow considerable autonomy. As a foreign JV manager
commented, “our Chinese parent has no interest in the daily operation
of the JV e what it cares is the ?nancial outcome”. This indicates that
the Chinese partner is reluctant to take the time and effort to
accumulate technological knowledge and managerial skills beyond
immediate ?nancial returns. In summary, the Chinese parent is
more inclined to leave operating autonomy to the discretion of JV
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 243
managers because it is satis?ed with outcome-based performance
evaluations. Thus, we suggest:
H2. In the case of Chinese-foreign JVs, greater equity ownership
by the foreign parent will weaken the JV's operating autonomy; in
contrast, greater equity ownership by the Chinese parent will
strengthen the JV's operating autonomy.
2.4. Resource contributions
By Brooke's (1984, p. 58) de?nition, power refers to “the attri-
butes or resources which enable the authority to be exercised”. The
sponsoring parent that interacts more with the JV is able to exert
more in?uence on the latter (Emerson, 1962). This power to in?u-
ence decisions is a resource-based power rather than a structural
power which is related to corporate hierarchies (Birkinshaw &
Ridderstrale, 1999; Karhunen, Lofgren, & Kosonen, 2008; Yan &
Child, 2002). Sponsoring ?rms expect that the higher percentage
of input resources coming froma particular parent eand the higher
percentage of sales going to that parent e the lower the autonomy
of the JV vis- a-vis those resources (Barden, Steensma, & Lyles,
2005; Garnier, 1982; Hill & Hellriegel, 1994).
The parent ?rmthat contributes salient resources has the power
to enforce its decisions pertaining to the contributed resources
(Chen et al., 2009; Hill & Hellriegel, 1994). Mjoen and Tallman
(1997) claimed that the more strategic resources a parent ?rm
contributes, the more likely it would have greater control. In
contrast to the Chinese parent that contributes more general re-
sources such as industrial experience and knowledge of business
culture, the foreign parent often contributes more knowledge-
based resources such as technological and organizational skills
that are typically scarce, proprietary and inimitable in the devel-
oping country (Luo et al., 2001; Yan & Gray, 1994). Knowledge-
based resources require the parent ?rm to be directly involved in
JV operations to facilitate resource transfer (Chen et al., 2009;
Gupta & Govindarajan, 1991). This close interaction enhances the
capability of the parent ?rm to monitor JV operations.
According to the interviewee of a Swedish medical equipment
company, “we (the Swedish partner) bring all the key equipment to
manufacture inthe JV. We want tomake sure the entire qualitystandardis
met, and our product is reliable as if it is produced in Sweden”. Moreover,
the foreign parent may also be concerned about the suboptimal use of
its technology by the JVandmisappropriationof the technology by the
local partner (Mjoen&Tallman, 1997). Sothe foreignparent is inclined
to protect the speci?c critical resources it contributes to the JV
(Beamish & Banks, 1987; Li, Zhou, & Zajac, 2009; Newburry & Zeira,
1999). Hence, the JV will have less operating autonomy.
In contrast, the Chinese parent is less keen on exerting in?uence
on making operational decisions. Property-based resources are
well-de?ned assets that correspond to clear property rights
(Barney, 1991), which allow an unambiguous evaluation of the
market value of such assets (Chen et al., 2009). With the contri-
bution of property-based resources, the Chinese parent can leave
functional decisions to the JV management and focuses on out-
comes. Furthermore, environmental and cultural closeness trumps
resources in the case of the Chinese parent which can relinquish
decision-making to the JV's management; the foreign parent ex-
ercises its decision-making in?uence by adjusting the resources
contributed. We suggest:
H3. In the case of Chinese-foreign JVs, higher contribution of
salient resources by the foreign parent will weaken the JV's oper-
ating autonomy; in contrast, higher contribution of salient re-
sources by the Chinese parent will strengthen the JV's operating
autonomy.
3. Methodology
3.1. Sample and data collection
Our hypotheses were tested using ?eld research data collected
from 45 Sino-foreign JVs in 2007 using interviews guided by a
structured questionnaire. We interviewed one person representing
each JV, including JV general managers, deputy general managers,
and senior executives (including both expatriates and locals). JV
managers are appropriate for providing data on resource contri-
bution and decision autonomy because they are most aware of
contribution amounts and resource characteristics, and they are
most likely to understand the type and degree of decision auton-
omy that the parent ?rms permit (Chen et al., 2009; Hill &
Hellriegel, 1994).
We requested the foreign-investment membership lists pub-
lished by the Chambers of Commerce from Germany, Switzerland,
Sweden, France, U.S., Japan and Singapore. The membership lists
provided general company information as well as detailed contact
information of the JV top managers. We adopted three criteria for
the selection of a JV: (1) a JV must have at least 10 employees and
RMB 1 million in its initial equity investment; (2) a JV must have
existed for at least one year; (3) the major Chinese parent and the
major foreign parent each must have at least ?ve percent of total
equity of a JV.
Initially, we contacted some companies through emails and
posted mails; however, the response rate was extremely low. We
found that survey-based CEO research was hard to conduct in
China. Therefore, we extended our strategy of data collection using
structured interviews. With the help of some open-ended ques-
tions, these interviews enabled us to probe the respondent's in-
depth thinking and guided our interpretation of certain phenom-
ena (Schwab, 2005). As the business community in China was not
accustomed to academic collaboration, face-to-face interaction
enhanced understanding and motivated participation. So we
phoned the top managers, stated our intention, and requested an
interview. Upon receiving their agreement, we scheduled a per-
sonal meeting. In total, we selected 650 JV senior managers and
phoned them; 36 JVs were either dissolved or their managers left
the positions. 50 managers agreed to participate in the research,
but 5 managers or ?rms did not ?t our research. We obtained 45
complete interview responses, with a response rate of 7% (see
Appendix). The design of our questionnaire was modi?ed slightly
from that of Sim and Ali (1998, 2000) to adapt to the Chinese
context.
Due to the research nature that required a personal meeting
with the respondent which took him/her a large amount of time
(on average 2 h), a random sample was not possible to obtain. Also
because the respondents were senior managers who volunteered to
be interviewed, this is not a random sample developed using sub-
sample strati?cation. As an access sample, the observations have
geographical bias; instead of a sample that is representative of the
geographic distribution of the population of Chinese JVs, our
sample over-represents JVs located in Northern China.
Our sample comprised 26 Sino-European JVs, 6 Sino-U.S., and 13
Sino-Asian (foreign parents were based in Japan or Singapore). 27
JVs were foreign majority equity, 11 were Chinese majority equity,
and 7 were equal equity (50e50). The Chinese parents of 9 JVs were
state-owned enterprises (SOEs) and the rest 36 JVs were non-SOEs.
The interviews were taken with 35 JVs (77.78%) located in North/
Northeast China, 4 JVs (8.89%) in Yangtze River Delta, and 6 JVs
(13.33%) in other regions of China. The JVs represented a range of
manufacturing industries, including chemicals and pharmaceuti-
cals, machinery, electric technology, metals, and vehicle- and
airplane construction, as well as services.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 244
We compared our sample ?rms with JVs included in the Annual
Industrial Survey Database (2006) of the Chinese National Bureau of
Statistics. This database is one of the most comprehensive indus-
trial surveys published and includes information on all state-
owned enterprises (SOEs), and non-SOEs including foreign-
invested ?rms with annual sales exceeding RMB 5 million
(approximately US$ 640,000 according to the of?cial 2006 ex-
change rate). Firm demographic information and key ?nancial data
are included in the database. This database has been used in prior
studies such as Buckley, Clegg, and Wang (2002), and Chang and Xu
(2008). 301,961 ?rms are included in the database in 2006, among
which 13,256 ?rms (4.39%) are JVs. Among all the JVs, the
geographical locations are as follows: 2366 JVs (17.85%) were
located in North/Northeast China, 5722 JVs (43.17%) in Yangtze
River Delta, and the rest 5168 JVs (38.99%) elsewhere. We compared
our sample JV ?rms and non-responding ?rms with the JVs
included in the industrial database on sales and the number of
employees. No signi?cant differences were found between the
three sets of ?rms on these criteria at p < 0.05.
3.2. Measures: dependent variable
3.2.1. JV autonomy
Following prior autonomy research, we adopted a dyadic view
between JV autonomy and parent control for decision-making
(Garnier, Osborn, Galicia, & Lecon, 1979; Newburry & Zeira, 1999;
Taggart & Hood, 1999). We assumed that the JV operated be-
tween the extremes of being fully-autonomous and fully-
controlled. The interviewed JV executives were asked to assess
the extent to which various decisions (as listed below) were made
by the JV and one (or both) of its parent(s). Each decision was coded
using a scale in which “1” indicated that a decision was exclusively
made by the JV, and “5” indicated that a decision was made
exclusively by one (or both) parent(s). The signs on the coef?cients
in autonomy regressions will be reversed. Brie?y, because “1” refers
to high JV autonomy and “5” refers to tight parental control, a
positive sign on coef?cients where autonomy is the dependent
variable means high parental control (or low JV autonomy) and
when a coef?cient is negative where autonomy is the dependent
variable, it means low parental control (or high JV autonomy).
Operating autonomy was measured by the types of decisions.
Similar to the measures used by Garnier (1982), 11 types of strategic
and operational decisions were selected to evaluate the JV's degree
of operating autonomy. Strategic decisions included production
technology, quality standards, ?nancing sources, dividend distri-
butions, and selection, promotion & compensation of executives.
Operational decisions included production schedules, product
pricing, advertising and promotion, distribution channels, import
sourcing, and import pricing.
3.3. Measures: independent variables
3.3.1. Equity structure
Equity measured the present percentage of equity in the JV
owned by the Chinese parent (Chinese parent equity) and the
foreign parent (foreign parent equity).
3.3.2. Resource contributions of the parents
Seven types of resource contributions of the sponsoring ?rms to
their JV were considered: product and process technology; tech-
nical personnel; management personnel; distribution channels;
materials and components; capital and ?nance; and access to target
market. The interviewed JV executive was asked to assess (1) the
percentage of contribution (ranging from 0% to 100%) made by the
Chinese parent and the foreign parent of each of the diverse
resource areas (the combined percentage of parental contribution
could not exceed 100%), and (2) the relative importance of each of
the seven resource areas to the JV's operations. (The importance of
each resource contributed was coded using a scale in which “1”
indicated that a resource was not important at all, and “5” indicated
that a resource was very important.)
Responses to the questions about relative importance of a
particular contributed resource were weighted by dividing each
response by the total of responses to all the 7 resource areas. The
resulting weighted importance of each contributed resource was
multiplied by responses to each question pertaining to the pro-
portional resource contributions of the Chinese parent and the
foreign parent to create two indices for each contributed resource e
one for each parent.
3.4. Control variables
3.4.1. JV size
We controlled JV ?rm size. In operation, the logarithmic trans-
formation of the JV's sales volume in 2006 was used to represent
the ?rm size.
3.4.2. JV age
JV age was measured in terms of number of years the JV was in
operation.
3.4.3. Number of parents
We controlled the number of sponsoring parents.
3.4.4. Respondent association
We also controlled respondent association regarding whether
the respondent was local or expatriate. It was used as a dummy
variable, with the respondent appointed by the local Chinese
parent being assigned with a value of 0, and the respondent
appointed by the foreign parent assigned with a value of 1.
3.4.5. Industry
JV industry was controlled using a dummy variable, with 1 for
manufacturing; otherwise, 0 for services. The level of industry re-
striction was also controlled using a dummy, with 1 for a restrictive
industry; otherwise, 0 for a non-restrictive industry.
3.4.6. Cultural similarity
Cultural similarity was controlled using a dummy variable, with
1 for the culture of the foreign parent similar to that of the host
Chinese parent (i.e., Asian culture); otherwise, 0 for other cultures
(i.e., non-Asian cultures).
3.5. Model speci?cation
Following the methodology used by Yan and Child (2002) on a
similarly small sample, a regression model was chosen to estimate
the effects of equity structure, and resource contributions of the
parents on JV autonomy. Our relatively small sample size would
decrease the occurrence of Type I errors or the likelihood of falsely
accepting the study's hypotheses (Speed, 1994). An alternative
treatment of the data could be a factor analysis procedure pro-
ducing scaling that could be used in subsequent regression models.
But because the individual contributions of each class of predictor
variable (indicated by their standardized beta coef?cients) were of
interest, factor analysis was not used.
The model for H2 and H3 could be expressed as:
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 245
JV operating autonomy ¼ a þðb
1
x EquityÞ
þðb
2
x Resource contributionÞ
þðb
3
x JV sizeÞ þðb
4
x JV ageÞ
þðb
5
x Number of parentsÞ
þðb
6
x Respondent associationÞ
þðb
7
x JV industryÞ
þb
7
x Industry restriction
þb
8
x Cultural similarity (1)
where JV operating autonomy represents autonomy in each of
the 11 types of decisions, and resource contribution represents each
of the 7 types of resources.
4. Results
4.1. Strategic versus operational decisions
Table 1 reports the results of t-test statistics used to test the level of
autonomy of JV decisions. Decisions with an average score above 3.0
were considered to be more centralized, while those scoring an
average below 3.0 were more autonomous. Table 1 reports that
several strategic decisions (dividend distribution, selection, promo-
tion &compensation of executives, ?nancing sources) made centrally
by parent companies were statistically-signi?cant (p < 0.05 or less)
and had the expected high scores; other decisions de?ned as ‘stra-
tegic’ in prior studies e production technology, quality standards e
were statistically non-signi?cant, sowere likelymadethroughmutual
consultation between the JV and its parents, suggesting partial sup-
port for Hypothesis 1a. Table1reports that someoperational decisions
(e.g., production schedules) made by the JV were statistically-
signi?cant (p < 0.05 or less) and had the expected low scores; the
remainingdecision, import pricing, whichwas de?nedas ‘operational’
in prior studies, showed little statistically-signi?cant difference from
the median point of 3.0, suggesting partial support for Hypothesis 1b.
Results are generally consistent with previous research that
found that JVs were more inclined to make operational decisions,
while strategic decisions were made by parent ?rms. In particular,
results indicate that JVs had decision-making autonomy in de-
cisions pertaining to the production and marketing functions, while
parent ?rms controlled ?nancing and top management issues. The
mixed results (expressed by statistically signi?cant and non-
signi?cant results) suggest that not all operational decisions were
made by JV management; nor were all strategic decisions made by
its parents. Results indicate that parent ?rms participated in
operational decisions that had strategic implications and their JV
participated in strategic decisions that had strong operational im-
plications. For example, decisions related to production technology
were taken as strategic decisions due to their high sensitivity to the
parent that brought in the technology. Imposing tight control on
production technology could prevent the other partner from
opportunistic behavior. But production technology concerns day-
to-day operations of the JV, and the management could exploit
new technology while adapting it for local use. To reach such a
balance between national adaptation/responsiveness and the
achievement of global strategy/ef?ciency, the JV and parents have
to be exposed to continuous “bargaining” to in?uence decision-
making (Bartlett & Ghoshal, 1989). Thus, it is of our interest to
examine further the determinants of autonomy of these ‘in-be-
tween’ decisions that are not strictly strategic or operational.
4.2. Equity structure
Table 2 presents descriptive statistics and correlations of the
variables useful for the following multiple regression analyses.
Table 3 and Table 4 report the results of regressions used to test
the effects of equity on JV autonomy in production technology,
import pricing and quality standards. A positively-signed coef?-
cient would be interpreted that a high proportion of equity held by
a parent would correspond to a high level of parent control (i.e., low
JV operating autonomy) vis- a-vis certain decisions; reversely, a
negatively-signed coef?cient would be interpreted that a high
proportion of equity held by a parent would correspond to a low
level of parent control (i.e., high JV operating autonomy) vis-a-vis
certain decisions. It indicates support for Hypothesis 2 regarding
the positive relationship between high equity proportions held by
the foreign parent and high level of parent control (i.e., low JV
operating autonomy) for the decision on production technology;
the coef?cient sign is as expected and the result is statistically-
signi?cant for production technology (b ¼ 3.200, p < 0.001).
Hypothesis 2 also predicted a negative relationship between pro-
portions of equity held by the Chinese parent and low parent
control (i.e., high JV autonomy) over the production technology,
import pricing and quality standards decisions; the coef?cient
signs are as expected and the results are statistically-signi?cant for
production technology (b ¼ À3.029, p < 0.01) and import pricing
(b ¼ À2.049, p < 0.05). Thus, Hypothesis 2 is partially supported.
4.3. Resource contributions
Tables 3 and 4 report the results of regressions used to test the
effects of resource contributions on JV autonomy in production
technology, import pricing and quality standards. A positively-
signed coef?cient would be interpreted that a high level of
Table 1
Strategic and operational decisions in JVs.
Mean S.d. t
a
Dividend distributions
b
4.13 1.185 5.372***
Selection, promotion & compensation of executives
b
3.80 1.487 3.466***
Financing sources
b
3.47 1.319 2.010*
Production technology
b
3.18 1.570 0.665
Quality standards
b
3.12 1.691 0.412
Import pricing 2.60 1.418 À1.668
Import sourcing 2.48 1.439 À2.057*
Product pricing 2.29 1.412 À3.101**
Distribution channels 2.14 1.508 À3.007**
Advertising & promotion 2.09 1.463 À3.698***
Production schedules 1.85 1.349 À4.903***
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
Test value ¼ 3.0; 2-tailed tests.
b
Indicates strategic decisions.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 246
Table 2
Descriptive statistics and Pearson correlation matrix.
Variables Mean S.d. 1 2 3 4 5 6 7 8 9 10 11 12 13
1 JV size 7.88 0.89
2 JV age 8.76 5.39 0.53***
3 Number of parents 2.56 1.01 À0.04 0.25
4 Respondent association 0.42 0.50 À0.16 À0.26 À0.34*
5 JV industry 0.78 0.42 0.15 À0.08 À0.18 0.02
6 Industry restriction 0.20 0.40 0.34* 0.04 À0.22 0.14 À0.27
7 Cultural similarity 0.29 0.45 À0.12 0.03 0.19 0.05 0.11 À0.20
8 Chinese parent equity 0.35 0.20 À0.04 0.14 0.02 0.07 À0.26 0.02 À0.03
9 Foreign parent equity 0.60 0.24 0.09 À0.19 À0.30* 0.06 0.24 0.07 0.02 À0.88***
10 Chinese parent's contribution in product
& process technology
0.02 0.03 À0.07 À0.19 À0.13 À0.00 0.14 0.20 0.09 0.26 À0.36
11 Foreign parent's contribution in product &
process technology
0.08 0.06 À0.08 À0.13 0.12 0.17 À0.30 0.07 0.05 À0.28 0.30 À0.52
12 JV autonomy in production technology 3.18 1.57 0.18 À0.12 0.03 À0.02 À0.30 À0.01 À0.06 À0.45** 0.50** À0.29 0.18
13 JV autonomy in import pricing 2.60 1.42 À0.24 À0.14 À0.12 0.09 0.28 À0.28 0.00 À0.39* 0.31 À0.25 0.30 0.26
14 JV autonomy in quality standards 3.12 1.69 0.20 À0.04 0.04 À0.02 À0.20 À0.19 0.17 À0.08 0.08 À0.53** 0.49* 0.58*** 0.39*
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
Table 3
Regression model for operating autonomy in production technology and import pricing.
a
Operating autonomy in production technology Operating autonomy in import pricing
Control variables
JV size 0.675
b
(0.337) 0.615
b
(0.306) 0.559
b
(0.297) À0.222 (0.312) À0.264 (0.298) À0.315 (0.304)
JV age À0.082
b
(0.047) À0.063 (0.044) À0.058 (0.042) À0.001 (0.044) 0.009 (0.043) 0.018 (0.043)
Number of parents 0.045 (0.237) 0.014 (0.215) 0.233 (0.215) À0.220 (0.220) À0.240 (0.210) À0.182 (0.220)
Respondent association 0.007 (0.456) 0.128 (0.416) 0.155 (0.405) 0.155 (0.423) 0.229 (0.406) 0.106 (0.415)
JV industry À0.728 (0.558) À1.048
b
(0.541) À1.100* (0.508) 0.121 (0.517) À0.044 (0.528) 0.141 (0.520)
Industry restriction À0.628 (0.615) À0.659 (0.582) À0.707 (0.538) À0.853 (0.571) À0.807 (0.568) À0.876 (0.550)
Cultural similarity À0.079 (0.472) À0.094 (0.433) À0.182 (0.414) À0.118 (0.438) À0.103 (0.422) À0.202 (0.424)
Main effects
Chinese parent equity À3.029** (1.022) À2.049* (0.997)
Foreign parent equity 3.200*** (0.873) 1.183 (0.894)
Chinese parent's contribution in product &
process technology
À3.197 (8.891) À5.942 (8.673)
Foreign parent's contribution in product &
process technology
À3.436 (4.125) 5.379 (4.223)
Model F 0.771 1.846* 2.288* 0.903 1.410
b
1.293
Adjusted R
2
À0.038 0.148 0.209 À0.016 0.077 0.057
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
The entries in the table are unstandardized coef?cients. Standard errors in parentheses.
b
p < 0.10.
Table 4
Regression model for operating autonomy in quality standards.
a
Operating autonomy in quality standards
Control variables
JV size 0.918* (0.337) 0.906* (0.331) 0.876* (0.345)
JV age À0.075 (0.047) À0.086
b
(0.048) À0.066 (0.049)
Number of parents À0.070 (0.238) À0.069 (0.233) À0.077 (0.250)
Respondent association 0.061 (0.457) 0.037 (0.451) 0.004 (0.471)
JV industry À1.193* (0.559) À0.986 (0.585) À1.116
b
(0.590)
Industry restriction À1.479* (0.616) À1.182
b
(0.630) À1.481* (0.625)
Cultural similarity 0.621 (0.473) 0.733 (0.469) 0.582 (0.481)
Main effects
Chinese parent equity À0.217 (1.107)
Foreign parent equity 0.246 (1.015)
Chinese parent's contribution in product & process technology À17.096
b
(9.626)
Foreign parent's contribution in product & process technology 4.188 (4.795)
Model F 1.695 1.773
b
1.400
Adjusted R
2
0.100 0.136 0.076
N ¼ 45.
*p < 0.05; **p < 0.01; ***p < 0.001.
a
The entries in the table are unstandardized coef?cients. Standard errors in parentheses.
b
p < 0.10.
W. Yang, K.R. Harrigan / Asia Paci?c Management Review 20 (2015) 241e251 247
resource contributions would correspond to a high level of parent
control (i.e., lowJV autonomy) vis- a-vis certain decisions; reversely,
a negatively-signed coef?cient would be interpreted that a high
level of resource contributions would correspond to a low level of
parent control (i.e., high JV autonomy) vis- a-vis certain decisions.
We only found support to Hypothesis 3 for one resource-autonomy
relationship, which is reported below.
There is a negative relationship between the Chinese parent's
high resource contributions in product and process technology and
its low levels of control (i.e., high JV autonomy) in making quality
standards decisions; the coef?cient signs are as expected and results
are statistically-signi?cant (b ¼À17.096, p