How Existing Organizational Practices Affect the Transfer of Practices to International Joint Ventures

Abstract

This study examines whether and how far the existence of prior organizational practices affects the transfer of new practices in the context of international joint ventures. Based on 324 pairs of survey responses collected from joint ventures set up by either Hong Kong or Singapore companies in mainland China, the results indicate that similarity between new and existing practices decreases while entrenchment of existing practices increases the difficulty of transfer. These two effects are moderated by the ownership—Chinese versus foreign—of existing practices. Transferring new practices that substitute for Chinese practices is more difficult than transferring practices that substitute for foreign practices or than transferring brand new practices.

Appendix: Survey Items

1.1 Difficulty of Transfer (foreign partner, α = 0.93), adapted from Szulanski (1996)

• 1. The joint venture could not free employees from regular operations so that they could be properly trained to adopt the practice.

• 2. Communication of transfer-related information broke down within the joint venture.

• 3. Local employees of the joint venture were able to recognize inadequacies in the foreign partner’s offerings (reverse-coded).

• 4. Local employees of the joint venture knew what questions to ask the foreign partner concerning the practice (reverse-coded).

• 5. Local employees of the joint venture recognized the requirements for adopting the practice (reverse-coded).

• 6. Much of what the local employees should have done during the transfer was eventually completed by the foreign partner.

• 7. Local employees of the joint venture made modifications that reduce the practice’s effectiveness.

• 8. By altering the practice, the joint venture created further problems that had to be solved by the foreign partner.

• 9. The foreign partner had to make unforeseen changes to the practice in order to successfully transfer the practice.

• 10. The transfer process turned out to be much longer than initially expected.

• 11. The total cost of the transfer was much higher than initially expected.

1.2 Smoothness of Implementation (Chinese partner, α = 0.84)

• 1. The practice has been implemented smoothly in the joint venture.

• 2. The practice has been well received by employees who are affected by it.

• 3. There were heated debates about the effectiveness of the practice (reverse-coded).

1.3 Tacitness (foreign partner, α = 0.88; Chinese partner, α = 0.78; r = 0.88)

• 1. The practice can be easily codified (in manuals, guidelines, blueprints, software, etc.) (reverse coded).

• 2. Extensive documentation describing critical parts of the practice exists in the joint venture (reverse coded).

• 3. The practice can be transferred only through intensive interactions between personnel from the foreign partner and local employees of the joint venture.

1.4 Causal Ambiguity (foreign partner, α = 0.89; Chinese partner, α = 0.86; r = 0.86), adapted from Szulanski (1996)

• 1. With the practice, we know why a given action results in a given outcome (reverse-coded).

• 2. When a problem occurred with the practice, the precise reasons for failure could not be articulated even after the event.

• 3. There is a precise list of the skills, resources, and prerequisites necessary for successfully performing the practice (reverse coded).

• 4. It is well known how the components of that list interact to produce the practice’s output.

1.5 Complexity (foreign partner, α = 0.91; Chinese partner, α = 0.90; r = 0.93), adapted from Riusala and Smale (2007)

The practice:

• 1. Consists of many interdependent elements,

• 2. Is complicated,

• 3. Is difficult to comprehend.

1.6 Adjustment (foreign partner, α = 0.93; Chinese partner, α = 0.90; r = 0.93)

When implementing the new practice, there is little adjustment, relative to the replaced practice, in terms of:

• 1. Procedures,

• 2. Coordination with other departments or sections within the joint venture,

• 3. Training.

1.7 Entrenchment (foreign partner, α = 0.80; Chinese partner, α = 0.88; r = 0.87)

The original practice:

• 1. Was well accepted by employees who were affected by the practice,

• 2. Was very effective in achieving its function,

• 3. Involved many aspects of the department that adopted the practice.

1.8 Transfer Experience (foreign partner, α = 0.79)

• 1. Our company is very experienced in transferring organizational practices to our operation(s) in China.

• 2. Our company has transferred many organizational practices to our operation(s) in China.

1.9 Source Credibility (Chinese partner, α = 0.91)

The foreign partner:

• 1. Is very experienced in this industry,

• 2. Has a good reputation in this industry,

• 3. Has superior expertise related to the transferred organizational practice,

• 4. Has the necessary resources to support the transfer.

1.10 Absorptive Capacity (foreign partner, α = 0.91; Chinese partner, α = 0.87; r = 0.85), adapted from Szulanski (1996)

• 1. The foreign partner and the joint venture have a common language to deal with the practice.

• 2. The joint venture has a vision of what it was trying to achieve with the practice.

• 3. The joint venture has information on the state-of-the-art of the practice.

• 4. The joint venture has a clear division of roles and responsibilities for implementing the practice.

• 5. The joint venture has the necessary skills to implement the practice.

• 6. The joint venture has the technical competence to absorb the practice.

• 7. The joint venture has the managerial competence to absorb the practice.

• 8. The joint venture can exploit new information about the practice.

• 9. The joint venture can help solve problems associated with the practice.

1.11 Learning Intent (foreign partner, α = 0.88; Chinese partner, α = 0.85; r = 0.10)

Local employees of the joint venture:

• 1. Were motivated to learn the practice,

• 2. Saw the benefits of adopting the practice,

• 3. Were willing to spend extra efforts in order to implement the practice successfully,

• 4. Were eager to seek further information from the foreign partner for trouble-shooting the practice.