Science Research Management

Science Research Management ›› 2021, Vol. 42 ›› Issue (2): 100-111.

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The influence of joint ventures under institutional isomorphism on enterprises innovation performance#br#

Wu Chong, Bo Siyi, Huang Caihong   

  1. School of Business, Nanjing University of Information Science and Technology, Nanjing 210044, Jiangsu, China
  • Received:2018-10-10 Revised:2019-07-09 Online:2021-02-20 Published:2021-02-23

Abstract:

With the rising of anti-globalization and economic nationalism, the institutional environment of the host country is changing unfavorably for Chinese enterprises. Joint ventures (JVs) under the pressure of local legitimacy have gradually become an important strategic choice for Chinese enterprises, which affects the innovation performance of parent companies after reversely transferring knowledge through their overseas business. Thus, the guiding significance of institutional isomorphism theory with the core concept of "legitimacy" stands out in the international business practice.
   Therefore, the research on the relationship between OFDI strategic choice and enterprise innovation under institutional isomorphic framework is conducive to understanding the strategic behavior and international development of Chinese enterprises. However, although the institutional isomorphism theory can better explain the mechanism of organizational behavior′s isomorphism under a single institutional environment, but it cannot fully explain the isomorphic behavior of MNCs facing dual institutional logic between group and host country, so institutional isomorphism theory needs to be further developed in the field of international business. Recently developed isomorphism focus theory comes into being. It points out that MNCs can design their organizational structure and behavior under different isomorphic focus in multiple institutional environments in order to achieve sustainable competitiveness. 
    From a new perspective of isomorphism focus, this paper takes JVs as the typical representative of MNCs′ structure and behavior isomorphism, and studies the external conditions and influence paths of JVs choice under host country isomorphism on enterprises′ innovation performance. In view of this, this paper takes the OFDI listed companies in Chinese manufacturing industry as samples, divides the isomorphic focus of entry mode into three categories: zero isomorphism, unilateral isomorphism and dual isomorphism, and tests empirically the relationship between JVs choice under three kinds of isomorphism focus and enterprise′s innovation performance, and further examines the heterogeneous influence of organizational capacity and host country environment. The empirical analysis finds out that with the rising of the pressure on the legitimacy of Chinese enterprises′ entry modes, the possibility of JVs choice under host country unilateral isomorphism has increased. However, these "sub-optimal" choices which ignore the constraints of cross-cultural management and cooperative innovation capabilities, have a staged inhibiting effect on their innovation performance, especially in the case of insufficient core business capabilities of the enterprises and low economic level of host countries. Moreover， JVs choice under dual isomorphism which nature mature MNCs in developed countries are good at is difficult to bring "immediate" innovation promotion to Chinese enterprises at this stage. 
    The research conclusions have important implications for the optimization of OFDI strategy choice and its synergy effect of innovation for emerging economies′ latecomers. Firstly, based on the conflict or balance from the dual institutional logic between group and host country, Chinese enterprises need to evaluate accurately the current situation of their international capabilities, and to enhance the high-level international capabilities of cross-cultural management, cooperative innovation, balancing between innovation exploration and market development, and the dynamic international capability of adjusting flexibly their entry mode under environment changes. 
   Secondly, Chinese enterprises need to avoid the inhibiting effect of JVs choice under host country unilateral isomorphism on enterprise innovation, especially under the condition of the insufficient core business capabilities of enterprises and the low economic level of host country. In the future, with the increasing of Chinese enterprises′ international capacity and the legitimacy pressure of the host country, JVs choice under dual isomorphism is more likely to happen. It can be predicted that with the substantial development of international capacities of Chinese enterprises, such optimal strategic choice will be further motivated. 
     Finally, Chinese enterprises should take full advantage of the innovative synergy effect of core business capabilities and host country environment. On the one hand, Chinese enterprises need to further strengthen the "refocusing" in the core business field, in order to form comparative advantages of the status and structure in the JVs process. On the other hand, Chinese enterprises should make full use of the advantages of innovative resources and institutional environment in developed economies to accelerate cooperative innovation in JVs.

Key words: OFDI, institutional isomorphism, isomorphism focus, joint venture, innovation performance