Strategic Orientation, Foreign Parent Control, and Differentiation Capability Building of International Joint Ventures in an Emerging Market

Abstract

This article examines how strategic orientation and foreign parent control jointly affect differentiation capability building of international joint ventures (IJVs) in an emerging market. With a multisource data set of 156 IJVs in China, the authors find that technology and customer orientations have a positive effect on IJV differentiation capability and that such effects are contingent on foreign parent control. Technology orientation leads to stronger differentiation capability when foreign equity control is higher or operational control is greater. In contrast, customer orientation is more beneficial for differentiation capability building when foreign operational control is lower or social control is greater.