Multinationals and Emerging Economies

Multinationals and Emerging Economies

The Quest for Innovation and Sustainability

Innovation, Co-operation and Development series

Edited by Wilfred Dolfsma, Geert Duysters and Ionara Costa

The global economy is changing rapidly and multinational corporations (MNCs) are at the forefront of this transformation. This book provides novel and profound analyses of how MNCs and emerging economies are related, and how this relationship affects the dynamics of the global economy. In particular, the authors deal with the nexus between multinationals, emerging economies and innovation from a variety of different perspectives. Innovation is regarded as a core driving force in the global economy but the authors show how it can impede as well as encourage sustainability. The book brings together insights from business studies and economics, and combines concise theoretical discussion with empirical analyses of unique data.

Chapter 5: Strategic Motivations for International Alliances: The Chinese Perspective

Tina Saebi and Qinqin Dong

Subjects: business and management, international business, organisational innovation, economics and finance, economics of innovation, international business, innovation and technology, economics of innovation, organisational innovation

Extract

Tina Saebi and Qinqin Dong INTRODUCTION Quite aware of the potential benefits of securing a competitive position in the 1.3 billion-consumer market of China, an increasing number of multinationals from the Triad countries ‒ Western Europe, US and Japan ‒ are establishing alliances with local Chinese companies. Chinese alliance partners can offer instant access to established customer and supplier bases as well as to the complex Chinese distribution system. Triad partners can further benefit from their local partners’ contacts, experience and credibility hence gathering valuable opportunities for strategic learning (Jagersma, 2005). However, given that alliances with local Chinese firms have become an important value-creating strategy for many Triad multinational companies, it is striking how poor the performance of many alliances remain. In general, one major cited reason for alliance failure is the incompatibility of alliance partners’ objectives. Failing to establish and communicate compatible objectives can lead to insuperable problems for the process and outcome of the alliance (Dacin et al., 1997). Particularly, divergences in alliance motives can lead to conflict situations, giving that alliance partners hold different expectations about the goals of the alliance. Especially in cross-border settings, alliance partners are likely to differ in terms of strategic intentions and alliance objectives (Dacin et al., 1997; Demirbag et al., 1995; Slocum and Lei, 1993; Tallman and Shenkar, 1990; Yan and Gray, 1994). Therefore, it is imperative to investigate the strategic motives of potential alliance partners in order to avoid premature and unfruitful termination of alliances. In this regard, the common underlying strategic...

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