Learning through the International Joint Venture: Lessons from the Experience of China’s Automotive Sector

Kyung-Min Nam

No 2010-01, Globelics Working Paper Series from Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management

Abstract: This study explores why international joint ventures (IJVs) — a foreign direct investment (FDI)-hosting arrangement often employed by the global South to strengthen foreign investors’ commitment to local economic development — may lead to only partial success in nurturing local technological capability. With a detailed case study of Shanghai-Volkswagen and Shanghai-General Motors, which are often considered two of the most successful Sino-foreign auto-assembly joint ventures, I argue that in the existence of a substantial technological-capability gap between alliance partners, the IJV arrangement is likely to create a “passive” learning mode where teachers determine what, when, and how learners should learn. Accordingly, although learners using this IJV arrangement may be able to strengthen their production capability, where interests of both IJV partner firms often converge, they may not be able to develop project-execution and innovation capabilities.

Date: 2010
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