Promoting international cooperation as a strategy for economic development: A case analysis of Israeli and U.S. high-technology partnerships
This dissertation describes how economic development and entrepreneurship can be achieved through the mechanism of international joint ventures (IJVs). The role played by a specific type of IJV foundation--created by the public sector in support of the private sector to foster economic development and growth--is an important part of this research. Specifically, this research focuses on the Israel-U.S. Binational Industrial Research and Development Foundation (BIRD) in assessing the role of the foundation in promoting IJVs. Using data gathered from questionnaires and interviews of Israeli and U.S. companies, the research highlights factors influencing IJV design, management, and performance. At the company level, several key conclusions emerge regarding the design and management of IJVs. First, the partners' commitment is critical for the project's success, even after controlling for the industry, ownership--form, age, size, and goals of the companies. Second, the industry in which the company is based has a statistically significant impact on project performance. Third, larger Israeli companies, with greater numbers of employees and revenues, perform better in IJVs than do smaller companies, even after controlling for the age and ownership-form of the firm. Fourth, Israeli firms should not rely on previous relationships with individuals in the prospective firm in choosing their U.S. partners. Finally, companies need to invest greater resources in partner selection, IJV design, and product commercialization in order to achieve greater success in the IJV. At the broader macro level, this study documents the success of the BIRD Foundation in achieving its principal objectives of attracting new U.S. companies to Israel, encouraging U.S. and Israeli firms to expand operations in the partner country, increasing high-value added exports, and enhancing the capabilities of the Israeli high-technology sector. It stresses the important role of BIRD-type foundation support as opposed to direct foreign aid in promoting the private sector, avoiding unnecessary governmental bureaucracies, creating mechanisms for organizational learning, and facilitating interpersonal relations that may help in overcoming political and cultural barriers between nations. Based on the empirical results, this study makes several recommendations for improving the performance of BIRD-type foundations and IJVs. Chief among these are the need for a comprehensive set of guidelines for measuring foundation and project performance on an ongoing basis; the need to better assist companies in critical decisions regarding partner selection and in managing their partner relationship; the need for greater flexibility in determining the scale of foundation investment on a case by case basis; and the advantage of investing a disproportionately large share of funding in small businesses and start-ups, with no common ownership, and in industries in which the countries involved have a relative competitive advantage.
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