Academic journal article Journal of Business Economics and Management

Should We Put Locals in Charge? Managing Relationships within Prospective US-South African Joint Ventures/ Ar Vietiniai Gyventojai Gali Uzimti Vadovaujancias Pareigas? Valdymo Santykiai Galimose Bendrose JAV Ir Pietu Afrikos Imonese

Academic journal article Journal of Business Economics and Management

Should We Put Locals in Charge? Managing Relationships within Prospective US-South African Joint Ventures/ Ar Vietiniai Gyventojai Gali Uzimti Vadovaujancias Pareigas? Valdymo Santykiai Galimose Bendrose JAV Ir Pietu Afrikos Imonese

Article excerpt

"If parents have compatible socio-cognitive structure based on similar business background, it should be easier for children born between the parents to learn, assimilate and acquire a unique new knowledge in this situation". Bea Oranyan

1. Introduction

International Joint Ventures (IJVs) established upon cooperation between multinational enterprises (MNEs) and local companies, rapidly spread as a new economic trend since the beginning of the 1990s (Park 2010). Consequently, knowledge the chief cause of many important changes in the global business environment became the key resource of the near future, led by increasing activities of joint alliances. Previous research in organizational learning, knowledge management and IJVs or alliances (e.g., Beamish and Lupton 2009; Cowan and Jonard 2009; Cuypers and Xavier 2010; Geringer and Frayne 1993; Gulati et al. 2009; Ku et al. 2008; Tang et al. 2006; Oxley and Wada 2009; Park 2010; Radzeviciene 2008; Wassmer 2010; Willman and Cave 1994) commonly identify knowledge as a crucial factor to improve corporate effectiveness in joint alliances. As the global economy has become a reality, much of the extant organizational and business literature which are based on research on successful performance of an international joint ventures have failed to take into account that the process of selecting a partner has become 'an increasingly complex decision process'. Selecting a partner includes all learning of available information, technology and sophisticated know-how that can promote and augment organizational efficacy, culture and effectiveness. Effective knowledge management (overt and covert application, creation, dissemination and evolving of knowledge) or Information sharing is the critical oxygen underlying competitive advantage, that is crucial in successful joint alliances (cf. Ratten and Ratten 2004). However, a joint venture's stock of knowledge should include cultural functionality in global settings, inter-partnership in various markets, ability to working within local laws and technical knowledge (e.g., Akande 1992a; Berdrow and Lane 2003; Chalos and O'Connor 2004; Desai et al. 2004; Hajidimitriou and Georgiou 2002; Leonidou et al. 2007; Madhok 2006; Oxley and Wada 2009).

This study explores South African managers' expectations of prospective joint ventures with US companies. This topic is of great importance since the cumulative foreign direct investment in South Africa since 1994 to date is estimated at $18.4 billion (www.businessmap.co.za), and the lion share of this foreign direct investment was in the form of joint ventures or buying into existing enterprises. There was very little foreign direct investment in new enterprises, a trend that hit hardest in the struggling black business sector in South Africa, giving the history of the nation. The economic sectors of activities in which joint ventures are most common in South Africa are research and development, national resource exploration and exploitation, engineering and construction, production/manufacturing, buying and selling and services (www.wwb.co.za).

United States direct investment in South Africa rose from about US$871 million in 1992 to more than US$1.34 billion in 1995 (http://lcweb2.loc.gov/frd/cs/zatoc.html). Foreign direct investment by US companies in South Africa stood at R19.6 billion ($2.76 billion) at the end of 2000. About 800 American companies, including subsidiaries, agents, distributors and franchisees employ over 100,000 people in South Africa (http://pretoria.usembassy.gov). United States direct investment in South Africa reached $3.427B in 2002 (www.bea.gov/bea/ARTICLES/2003/09September/0903usdia); (The search for information on the current business transaction was futile).

US corporations returned to South Africa after about ten years of boycotting the country for its human rights violations. For instance, in 1994, prominent African Americans such as Danny Glover, Shaquille O'Neal, and Johnnie L. …

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