Firms in emerging economies frequently use international joint ventures (IJV) as a channel for knowledge acquisition and technology advancement. This study shows that international joint ventures in Taiwan have a positive impact on firms’ innovative-ness-measured by R&D stocks between 2002 and 2009.
While IJVs provide a firm with access to new technology, how successful a firm is in exploiting that new knowledge for innovative purposes depends on the firms’ ownership structure. Our results highlight the importance of ownership structure in moderating the main effect, i.e. the positive innovation effect of forming IJV gets weaker for firms with high family ownership.
Our results have important managerial and policy implications. From a long-term perspective, policy makers need to understand under what conditions will foreign firms benefit or not benefit the performance of local firms, thus tailor their policies to promote the long term growth of the indigenous firms.
