A Dual Networks Perspective on Inter-Organizational Transfer Of R&D Capabilities: International Joint Ventures in the Chinese Automotive Industry

Many studies have examined the transfer of capabilities through international joint ventures (IJVs). However, few studies have examined how the source and recipients networks in which the IJV partners operate influence knowledge flow into or out of the IJV. We study knowledge flows among the firms in MNE source networks and local firms’ recipient networks, which join together through the IJV interface. We use thirty-two interviews with executives from four IJVs and three business group qiye jituan networks to explore the flow of R&D-related capabilities through source and recipient networks in the Chinese auto industry. The research has several implications for the literature on knowledge flows in emerging economies. First, several patterns of capability transfer stand out. We found a strong flow of both individually carried knowledge and group-level technical and managerial knowledge between the MNEs’ source networks and their IJVs. We found that the knowledge flow between an IJV and its recipient qiye jituan network also occurs, while also identifying substantial barriers to such knowledge flow. We found that asymmetries in terms of capabilities and motives of the source and recipient networks influenced knowledge flows. Second, the distinction between individually carried and group-embedded knowledge strongly influences the nature of knowledge flow. Individually carried capabilities are diffuse easily through the networks via the movement of personnel, while diffusion of group-embedded capabilities requires more complex mechanisms such as vertical relationships. Third, the research helps understand when the recipient network’s knowledge stock serves as absorptive capacity and when it serves as core rigidity such that individual knowledge has a positive influence on absorptive capacity, while organizational experience can create rigidity. The conclusions are important in emerging economies where organizational transformation must accompany technical advance. Recipient networks can facilitate this process by disrupting the old organizations through re-arrangement of personnel within the network, while investing in individual technical training.