Equity investment, knowledge exploitation, and innovation performance for joint ventures

Abstract

Abstract How is joint ventures' (JVs) innovation performance affected by their parent companies' equity investment and their exploitation of their parent firms' knowledge? We investigate 183 JV cases and examine the main effect of equity investment as well as the moderating effect of ambidexterity imbalance on the relationship between JVs' knowledge exploitation and exploration of their innovation performance. We utilize proprietary Securities Data Corporation (SDC) JV data combined with the National Bureau of Economic Research's (NBER) patent dataset to develop a mediated moderation model. The model indicates that equity investment is positively related to knowledge exploitation, which in turn has a positive effect on JVs' innovation; in addition, these relationships vary alongside ambidexterity imbalance. Our findings confirm the mediating role played by knowledge exploitation in JVs' innovative activities and highlight the tradeoff between organizational ambidexterity balance and knowledge exploitation as well as its influence on JVs' innovation performance. This research illuminates the foundations of JV innovation. Managerial implications are also discussed.