Foreign Direct Investment, Technological Capabilities and Performance in the Chinese Pharmaceutical Industry

Does a firm engage in a joint venture with a technologically advanced foreign partner to complement or substitute investments in its own technological capabilities? We address this question in a comparative study of 222 Chinese pharmaceutical manufacturers and Sino-foreign joint ventures. A combination of ANOVA and OLS regression results provide evidence that firms with joint ventures invest more in organizational resources associated with technological capabilities, are higher performing by a number of absolute and relative measures, and have different correlates of high performance than firms without joint ventures. While the study cannot address the question of direction of causality, it does provide support for the view that joint ventures and investments in organizational resources are complementary, or at least correlated, rather than substitution strategies.