Knowledge that Transforms

Foreign firms in host country environments frequently face location-based disadvantages. This study proposes three means (channels) of overcoming local knowledge disadvantages. Based on a sample of 558 Japanese joint ventures (JVs) located in Southeast and East Asia, we find that partnering with local firms (the first channel) can be a primary strategy for accessing local knowledge and improving JV performance. JV experience in the host country (the second channel) also mitigates local knowledge disadvantages and leads to increased JV performance. The third channel, the foreign parent's host country experience, leads to increased performance in the absence of a local partner. However, when a JV is formed with a local partner, increased parent experience in the host country leads to decreased performance suggesting that the need for a local partner declines as parent experience in a host country increases.

Managers in China, the USA and Britain were asked to describe the extent to which they used five sources for handling nine managerial events. Western managers were found to rely more upon their own experience and training, while in China, rules and procedures were more salient. For most events, Western managers who described themselves as relying on their own experience and training believed that the events had been well handled. They reported that events were less well handled to the extent that they referred to their superiors. Reliance on the superior was associated with role ambiguity among Western managers but not in China. Even though Chinese managers relied more upon rules and procedures they too evaluated events more positively when they had relied on their own experience and training. The results are discussed in terms of Chinese and Western cultural values and the prospects for change in managerial practice in China.

The study examines what drives the founding of specialist firms. Two theoretical explanations are tested for the founding of specialists: density dependence and resource partitioning. The study finds that specialists' foundings are dependent on the population's density at the global level, but not at the United States level. The evidence from a fragmented industry does not support the resource partitioning hypothesis, either at the global level or the United States national level. The study shows how multi-level analyses can suggest if an industry is multi-domestic or globally integrated.

Assessing whether the other party is likely to fulfil all obligations can be arduous when a transaction is international. The mechanisms that underpin compliance with agreements, and the functional detail of these mechanisms, may vary in relative importance between countries, perplexing the foreign operative. Additionally, a foreigner may suffer from informational constraints, communications distortions, and difficulty in achieving full acceptance in the local business culture.

In this paper, we study the cooperative strategies between two firms in an overseas country. In part 1, we examine the circumstances under which foreign firms would cooperate with another foreign firm in a third country market. Drawing upon existing literature, we develop and test a set of hypotheses using a longitudinal data set from China. The types of cooperative arrangements include all the major modes of operation. In part 2, we further investigate what types of operation and level of control exist among the cooperative arrangements between two foreign firms in China. We used a sample of 483 cooperative arrangements between two firms from Hong Kong, the U.S., Japan, Germany, or Britain. This study offers interesting insight as to why foreign firms form cooperative arrangements in an overseas country and what types of cooperative arrangements these firms prefer.

Contrary to prior research, this U.K.-based study finds a contemporaneous relation between the foreign exchange rate and the market value of large exporters. We also find a weak lagged relationship which suggests that the stock market takes time to incorporate all of the implications of foreign currency movements into share prices. Evidence that the nature of this relationship changed when sterling was in the ERM is also provided.