Joint ventures and technology adoption: A Chinese industrial policy that backfired

Sabrina T. Howell

Research Policy, 2018, vol. 47, issue 8, 1448-1462

Abstract: To spur technology transfer, emerging market policymakers often require foreign firms to form joint ventures (JVs) with domestic firms. Through knowledge spillovers, JVs may reduce technology acquisition costs for domestic firms. Yet domestic firm rents from JVs could discourage innovation through a cannibalization effect. Which force dominates is an empirical question. I address it with novel data on China's auto sector. In response to fuel economy standards requiring firms to upgrade technology or sacrifice quality, firms with JVs reduced quality and price relative to their counterparts. Consistent with cannibalization, firms with JVs drive the negative effect.

Keywords: Technology diffusion; Research and development; Joint ventures; Foreign direct investment; Industrial policy (search for similar items in EconPapers)
JEL-codes: L24 L52 O12 O14 O25 O32 O33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:47:y:2018:i:8:p:1448-1462

DOI: 10.1016/j.respol.2018.04.021

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