Knowledge exchange and learning through international joint ventures: an Anglo-Japanese experience

In this paper we review strategies for knowledge exchange through joint ventures. Firms collaborate for a number of reasons, including the reduction of cost and risk of technological or market development, to reduce time to market and the exploitation of scale economies. We examined 12 manufacturing joint ventures in the UK co-owned by British and Japanese parents. Interviews with and a detailed survey of the British and Japanese management reveal that parent's contribute different know-how to the joint venture. Of 40 functions assessed in detail, the British parent has greater influence in Accounting and Finance and Human Resource Management functions, with the exception of investment policies which are dominated by the Japanese parent. Overall, the only functions in which the Japanese parent is significantly more influential are research and product development. We observed three types of strategic conflict between parent firms: product strategy; market strategy; and pricing policy. These are primarily the result of coupling complementary resources with divergent strategies, what we refer to as the ‘trap of complementarity’. In essence, parents with complementary resources almost inevitably have different long term strategic objectives. Too many joint ventures are established to bridge gaps in short term resources, rather than for long term strategic fit