The influence of knowledge sharing to the economic and social impact of SMEs in IJVs in emerging countries in Asia

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‘The influence of knowledge sharing to the

economic and social impact of SMEs in IJVs

in emerging countries in Asia’

Name: Su-qin Lei-cowa Student number: 6089763

Date of submission: June 30, 2014 Version: Final draft

MSc. in Business Administration – International Management Amsterdam Business School – University of Amsterdam Supervisor: Suzana Rodrigues

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Statement of originality

This document is written by student Su-qin Lei-cowa who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This paper’s objective is to research what the influence of knowledge sharing is to economic and social impact of SMEs in IJV in emerging countries in Asia. Emerging economies are still a topic that has yet to be fully researched. Drawing upon past research, in social innovation the inclusiveness of different parties is very important. The main point here is that collaborations should go beyond its normal boundaries and that can contribute to the achievement of economic and social goals. This means that different parties are needed to contribute to one goal; that is the collaboration within and between organizations, and institutions. Social impact is measured in terms of how the IJV can contribute to the local community; for example having employment opportunities and being environmentally friendly. In this collaboration the sharing of knowledge plays an important role to achieve certain goals. To test the hypothesis, secondary quantitative data is used and run with regressions and mediation models. Secondary data was obtained from the PSI program, which is a program that gives financial support to those organizations that have the potential to combine social and economic goals. The outcome here is that four out of five hypotheses are rejected. In other words, this study contradicts previous research done on knowledge sharing and social innovation. Thus, the results showed that knowledge sharing has no significant relevance for SMEs in IJV in emerging countries in Asia in this type of setting.

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Chapter 1: Introduction

There are many forms of innovation. For instance, business innovation is motivated by profit maximization and is done typically by firms that are profit-orientated (Mulgan, 2006). Social innovation is about the innovative activities and services that are created by the goal of meeting social need (Mulgan, 2006). This type of innovation is diffused through organizations whose primary purposes are social (Mulgan, 2006). When thinking of social needs, one makes the connection to underdeveloped or developing countries. However, these developing countries usually don’t have the right resources to appropriately attend to the social needs. Economies are becoming more interconnected with global trade and investment patterns, small- and medium-sized enterprises (SMEs) are also becoming more significant pillars of the economies of the major trading partners (Acs, Morck & Yeung, 2001). On the other hand, SMEs don’t have the resources to internationalize (Acs et al., 2001). Therefore, SMEs engagement with social innovation in emerging economies is becoming more common. The reason behind this is that these types of international joint ventures (IJV) are sponsored by projects funded by private investors and the government. This means that private organization funds projects like these in cooperation with the government, they provide the investments needed to create an IJV. This facilitates the access of SMEs into foreign markets.

Furthermore, it is expected that by 2025 the combined GDP of the eight largest emerging countries are likely to be equal or even larger than that of the eight largest developing countries (Kiss, Danis & Cavusgil, 2012). For this reason alone emerging economies are an attractive market to invest in. Kiss et al., (2012) find that the research in international entrepreneurship in emerging economies is limited and absent in the mainstream management and strategy journals. It has been clear that emerging economies are growing and play an important role in the global economy. It is true that emerging countries now are still

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not at the level of developed countries, but there is huge growth potential. The population of emerging countries compromise of more than 70 percent of the world population (Kiss et al., 2012), this fact combined with the growth of GDP in these countries shows that the future markets are there (Pradhan & Lazaroiu, 2011). The liberalization of emerging economies and their integration into the global economy has changed the landscape (Kiss et al., 2012; Pradhan & Lazaroiu, 2011). The largest emerging economies are now one third of the world’s 25 largest economies and they are growing three times the pace of the advanced economies (Kiss et al., 2012; Pradhan & Lazaroiu, 2011). However, the opening and liberation of emerging country markets present not only new kinds of opportunities, but also constraints (Dahan, Doh, Oetzel & Yaziji, 2010). The institutional conditions and idiosyncratic environments of emerging countries present tough challenges for organizations entering and operating there (Dahan et al., 2010).

One fundamental problem organizations face in entering emerging countries markets is to obtain information about how to adapt existing or develop new products and services that are appropriate for the local consumers (Dahan, Doh, Oetzel &Yaziji, 2010). According to Dahan et al. (2010) is it difficult to acquire critical information about these kinds of markets, because marketing outreach and distributions is inaccessible and broader brand awareness and social reputations have no value there. An opportunity to overcome this, is that organization experience the market first-hand and gain experience in the emerging markets to understand the complexity of doing business there (Dahan et al., 2010). The IJV between SMEs of developed and emerging countries can be a good opportunity to study this gap in the literature. Local markets should be strengthened and supported with the arrival of the IJV and the next step is to reap potential benefits from those markets as there is a huge growing potential there.

To strengthen the local market, the local communities should benefit from the businesses that operate their business there. Therefore, the organizations that are active there should deliver a

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social impact. In the case of the IJV that is set up in emerging countries, social impact should strengthen the local community. That is the first step in entering the local market, however not much research has been done here (Dahan et al., 2010). Knowledge sharing between partners has been researched to be effective for economical survival (Lee, 2001). However, for the social impact that a business has to deliver; knowledge sharing has not been researched as an influential factor. According to Wang & Wang (2012) there is more insight needed into how organizations should improve their performance with well-conceived knowledge sharing or innovation strategies and practices. To fill this gap in the literature, this study tries to see what the influence is of knowledge sharing in the IJV between developed and emerging countries.

In conclusion, social challenges in emerging countries need to be addressed. More joint ventures are formed between developed and emerging countries to help solve the local social need. More understanding is needed from the emerging markets, because it is difficult to obtain information from local markets. The main research question here is: ‘What is the influence of knowledge sharing to the economic and social impact of SMEs in IJVs in emerging countries in Asia?’. Furthermore, it is of importance to research how these firms understand social impact and how they think they have created or plan to create that in the local environment. Besides, the role of the institutional framework should be taken into considerations as well.

The paper is structured as follows. In chapter 2, the literature review will be given of past research done on the subject. Chapter 3 contains the theoretical framework with its hypotheses. In chapter 4, the research design is given. Chapter 5 will discuss the results. Chapter 6 will give the discussion on the findings. Chapter 7 has the conclusions and research implications and will give recommendations for future research.

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Chapter 2: Literature review

This chapter is about what already has been studied on the topic social innovation and emerging countries in past research. It will go deeper into the subject and explain what social innovation exactly is and what other associations come with that. Furthermore, it will be shown what challenges and opportunities come with joint ventures, institutional frameworks and knowledge sharing.

2.1 Social impact

The literature on social impact is still limited even though the importance of concepts such as corporate social responsibility (CSR) and social enterprises are increasing. CSR is defined as the decisions and actions that are taken for reasons at least partially beyond the firm’s direct economic or technical interest (Carroll, 1991). To take the concept of CSR one step further, organizations are stimulated to create shared value, which involves creating economic value in a way that also at the same time creates value for society by addressing its needs and challenges (Porter & Kramer, 2011).

However, how can one measure the social impact created? There are two measures that are recognized to be most likely to be developed towards a common reporting framework: social accounting and auditing (SAA) and social return on investment (SROI) (Gibbon & Dey, 2011). SAA is a framework that allows the organization to build on existing documentation and reporting and develop a process where it can account for its social performance, report on that performance and create an action plan to enhance on that performance. Furthermore, the SAA helps to understand the impact on the community and makes it accountable for its key stakeholders (Gibbon & Dey, 2011). SROI also aims to understand and manage the impacts of a certain project, organization or policy (Gibbon & Dey, 2011). This measurement seeks to place a financial value on important impacts that do not have a market value as identified by

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stakeholders (Gibbon & Dey, 2011). The question here remains, whether companies who want to deliver a social impact actually use these measurements. Therefore, the next section will discuss what social innovation exactly is, and how and why a social enterprise can deliver social impact.

2.1.1 Social innovation: innovation and social exchange

Mumford (2002) defines social innovation as the generation and implementation of new ideas about how people should organize interpersonal activities, or social interactions, to meet one or more mutual goals. According to Ellis (2011) innovation is doesn’t only arise from the creation of new ventures, goods or services but also from the matching of existing goods and services with existing, unmet needs in new markets. Social innovation is in this regard not different from other forms of innovation; products originated from social innovation differ in their breadth and impact (Mumford, 2002). For instance, developing new social relationships might involve the generation of new kinds of social institutions, the formation of new ideas about government, or the development of social movement (Mumford, 2002). Also, it might involve the creation of new processes and procedures for structuring collaborative work, the introduction of new social practices in a group, or the generation of new business practices (Mumford, 2002). Although social innovation is not different from other innovations, they are relatively rare events (Mumford, 2002). Moreover, social innovations are events that involve interactions among various parties over rather long periods, which makes traditional experimentation more difficult, however not impossible (Mumford, 2002). Mumford (2002) addresses four implications on social innovation. First, social innovation needs an active exchange of information and detailed new ideas through interchange with others in an encouraging climate (Mumford, 2002). Seconds, ideas must reap tangible benefits and have a low-cost implantation within the context of existing systems (Mumford, 2002). Third, the

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support of elites and relevant groups need to be obtained (Mumford, 2002). Fourth, for the acceptance of the innovation, effective communication is essential (Mumford, 2002).

According to Mumford (2002) social innovation needs active leadership. In the case of SMEs, the impact of self-commitment in international cooperation, communication and structures have a positive effect on success (Fink, Harms & Kraus, 2008). Social innovation needs active acquisition and analysis of information regarding social problems (Mumford, 2002). Furthermore, people need to identify the restrictions on solutions and find strategies that can go around these restrictions (Mumford, 2002). Also, the process of revision and refinement will be interactive, thus support is needed for the solutions to be properly refined (Mumford, 2002).

Social innovation comes from people’s own interest in appealing to the common good (Mumford, 2002). Like mentioned before, innovation takes time, the same goes for social innovation. Social innovation comes in small waves, through the efforts of identifying problems and seeking the proper solution for them, and then incremental advances are made (Mumford, 2002). Through this process it is important to keep in mind that networks and support of elites and other groups are essential as well (Mumford, 2002; Manolova, Manev & Gyoshev, 2010). Furthermore, it is important to realize that social innovation may not need complete solutions, but rather timely, more limited solutions that address key issues while laying a foundation for more long-term solutions (Mumford, 2002). Further, during the process of thinking of solutions, one must also think of what the negative consequences of these solutions can be and what will happen when these solutions are implemented (Mumford, 2002). Also, social innovation may lay a foundation for technical advances, this shows that in a world where technology drives social change, social change can also drive the development of technologies (Mumford, 2002). Besides, one must also take into account the financial resources; innovations must be financially feasible (Mumford, 2002). In addition, during the

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process of social innovation, the social roles and relationships can be redefined (Mumford, 2002). In other words, that means that the redefinition of relationships is needed to achieve new goals or let old ones be met more efficiently (Mumford, 2002). Although social innovation can be seen as a form of creativity, this does not mean that domain-specific effects are of little relevance (Mumford, 2002).

It is clear that social innovation addresses the social needs. To come to a proper solution, the interaction between people is important, it is a team effort. People need to share information and tackle the problems together in order to socially innovate. Social impact here is seen as looking for and giving the proper solutions to address the social needs.

2.1.2 Social enterprise

Social innovation is about innovations that are applied to social issues, such as education and health, issues of inequality and inclusion (Leadbeater, 2007). A new way to do business is through the use of social enterprises, this means that the firm is animated by a social purpose (Leadbeater, 2007). Social enterprises have an interesting way to address weaknesses in the operation of both markets and governments (Leadbeater, 2007). In other words, social enterprises have different perspectives on social problems and on how these problems should be dealt with. Due to the fact that social enterprises are led by a sense of social purpose and have an aim to show that business and markets can deliver social benefits and deal with social problems, products and services are trade to further social and environmental goals (Leadbeater, 2007). Even though social enterprises are only a small part of the total enterprise sector of the economy, this doesn’t mean that they are not important (Leadbeater, 2007). Social enterprises are especially important to the overall business ecology, because they are pioneering approaches to show how business can operate successfully, as well as taking into account environmental issues (Leadbeater, 2007). However, social enterprises have the

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challenge to address whether businesses could be doing more to internalize social and environmental costs (Leadbeater, 2007). Nowadays, firms contribute to social and environmental issues through taxes or donating to charity (Leadbeater, 2007). Social enterprises have the task stimulate other enterprises to actively participate in solving social and environmental issues.

Social enterprises are often established, because governments cannot meet the needs of the consumers (Leadbeater, 2007). Social enterprises have a better way to deliver government-commissioned services (Leadbeater, 2007). Therefore, social enterprises have become more important to the government. The government now funds and commissions’ services for social enterprises, this does not mean that they provide the funds themselves necessarily (Leadbeater, 2007). In other words, the government connects social enterprises with funding from for-profit and non-for-profit corporations (Leadbeater, 2007). Furthermore, social enterprises build their position on the government’s shortcoming in providing of public services (Leadbeater, 2007). In other words, they draw ideas from social problems areas where the government cannot provide the appropriate services.

How can the social enterprise sustain its growth and generate more impact? In order to have this happen, social enterprises have to work hand in hand with both the public and private sector (Leadbeater, 2007). As mentioned before, social innovation is about interaction between people. The social enterprise shows that the collaboration between the public and private sector can be beneficial as well.

Multinationals face various challenges when entering developing countries, such as the need to adapt their business models to local markets’ cultural, economic, institutional and geographic features (Dahan et al., 2010). One can assume that SMEs face the same challenges, they also lack the tangible resources or/and intangible knowledge needed to address these

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challenges (Dahan et al., 2010). Therefore, both MNEs and SMEs should consider collaborating with non-profit nongovernmental organizations (NGOs) (Dahan et al., 2010). Furthermore, there is increasing pressure to ensure a high degree of social responsibility in operations from organizations, throughout the value chain and across the globe (Vachini, Doh & Teegen, 2009). NGOs’ importance in the international business sphere has risen in recent years (Vachini et al., 2009). This could lead to a partial solution to developing appropriate business model for developing countries (Dahan et al., 2010). NGOs have become important players in the global political, economic, social and business environment (Dahan et al., 2010). The social purpose of NGOs is to strive to serve certain interests by focusing advocacy and operational efforts on social, political and economical goals (Vachini et al., 2009). This means that they are active in education, health, environmental protection, human rights and equity (Vachini et al., 2009). These are the same areas where a social enterprise operates in. NGOs have the complementary capabilities along each stage of the value chain (Dahan et al., 2010). The partnerships between NGOs and for-profit organizations are increasing as there is potential for mutual benefits (Dahan et al., 2010). NGOs can provide for-profit organizations with access to different resources, competencies and capabilities than are otherwise available internally, or which for-profit organizations might obtain from alliances with other for-profit corporations (Dahan et al., 2010). The collaboration between NGOs and for-profit organizations show that these types of partnerships can lead to better mutual benefits. Thus, also here it is important that one works together and shares knowledge.

Here it is also evident that the social enterprise looks for solutions to aid social and environmental needs. The social enterprise in this regards does not differ from social innovation, as both concepts are driven by a social purpose. The difference that makes an organization a social enterprise is the collaboration with governmental bodies; this can be a direct or indirect involvement.

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2.2 Joint venture structure

There are two sides on how a joint venture performs best and this relates on the decision of parent organizations to split control across international joint ventures (IJVs) (Barden, Steensma & Lyle, 2005). Therefore, joint ventures can be seen as joint hierarchies (Brouthes & Hennart, 2007). On one side, the position is the dominant partner exercising relatively greater control over key decisions (Barden et al., 2005). This side draws on transaction cost theory and advocates that a dominant-partner control structure streamlines decision-making and strategy implementation in joint ventures by avoiding unnecessary disputes and conflicts (Barden et al., 2005). The other side, the position when partners share power evenly advocates that shared control creates mutual respect and a sense of fairness that furthers trust and declines conflicts between the partners (Barden et al., 2005).

IJVs are often used as a means of entering new markets (Barden et al., 2005; Meyer et al., 2009). This is not only with advantages, the problem most IJVs face is the coordination conflicts between the parent companies that are derived from their business’ performance (Barden et al., 2005). In other words, when a parent firm inputs certain non-recoverable resources and valuable expertise, it has a strong incentive to ensure that it gets an optimal return on those investments (Barden et al., 2005). The parent company also aims to signal other joint ventures that they should not misuse knowledge or other assets (Barden et al., 2005). According to Barden et al. (2005) the challenge here is to bring the desires of both parent companies into agreement in a manner that does not create excessive conflict between the parent firms.

Knowledge is one of the key factors in the internationalization process (Casillas, Moreno, Acedo, Gallego & Ramos, 2009). In developing economies, technology and technological know-how are the scarcest resources (Barden et al., 2005). Therefore, the

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control and protection of such resources are an important part of the parent companies’ judgments. Other resources such as financial capital, local market knowledge or legal legitimacy are expected to be relatively less influential compared to technological resources (Barden et al., 2005). Conflicts arising from this type of relationship, the collaboration of a developing country with a developed country, are because both firms have different types of resources that they bring to the IJV. Those resources differ in the importance for the IJV and therefore generate different expectations that both parties have from each other. The parents from developed country provide the IJV with the necessary technological know-how and operational expertise, and then the local parent tries to influence decisions related to operations. This violates the foreign parent’s control-structure-related expectations. In contrast, the local parent’s expectations are violated when the foreign parent has not been the source of the joint venture’s primary value-creating technological knowledge and resources (Barden et al., 2005). In other words, the degree to which the local parent’s and foreign parent’s control over operations creates tensions, disagreement and conflict between two parties involved are assumed to be generated from the degree to which the foreign parent has made contributions of technological resources to the IJV (Barden et al., 2005). Thus, because of the inconsistency between the level of control and the level of resources provided to the IJV, expectations are violated and will lead to conflict (Barden et al., 2005).

The consistency between what a parent can control and what they do control depends on the sense of equity by IJV parents (Barden et al., 2005). As mentioned before, both parents provide different resources to the IJV. Likewise, the ability to understand and monitor the different aspects of their joint venture differ as well (Barden et al., 2005). Furthermore, control over different areas of the joint venture may be compensatory (Barden et al., 2005). When a parent does not have the ability to control certain domains of the joint venture, they will look to those domains in which they do have the ability to do so (Barden et al., 2005). If

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this opportunity is taken away from them, a sense of inequity and conflict are more likely to happen (Barden et al., 2005). In the case of developing economies, the foreign parent usually provides the new value-creating skills and processes, while the local parents provide legal legitimacy and access for the joint venture (Barden et al., 2005).

Social innovation is about the inclusiveness of all members for the vitality of the organization and to deliver the right solutions to the social problems that are addressed. To address these social needs, one needs to go beyond the organization to reap the benefits of sharing information. With an IJV the problem with knowledge sharing already begins within the organization. This shows that the involvement between people does not only lead to opportunities, but also leads to challenges in collaborations.

2.3 Knowledge Sharing

Bresman, Birkinshaw and Nobel (1999) state that the industrial age have gone from capital as the most important resource to an age where the knowledge is the center of attention. That means that for the firm it has become more difficult to attain and sustain a competitive advantage through the allocation of capital and other assets on the balance sheet (Bresman et al., 1999). Furthermore, knowledge sharing in the setting of joint ventures and alliances is having the ability to re-evaluate and learning is the key to success (Bresman et al., 1999). An organization that fails to learn may be dysfunctional, while one that is willing to learn is believed to be able to generate competitive capabilities to sustain its business performance (Law & Ngai, 2008). Knowledge sharing is the voluntary diffusion of acquire skills and experience to the rest of the firm (Law & Ngai, 2008; Lee, 2001). Internal knowledge sharing is seen as the beliefs or routines for diffusing knowledge and experience across the units of a company (Law & Ngai, 2008). Knowledge sharing behaviors eases learning among employees and enables them to settle problems that have occurred in the past before (law &

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Ngai, 2008). Furthermore, this leads to faster responses to customer requirements at a lower cost in operations (Law & Ngai, 2008). Overall, sharing knowledge is an important part in an organization that will lead to improvements in market sensing and innovation activities (Law & Ngai, 2008). Strategic benefits can flow out from the learning and exchange of experience between employees and across the organization (Law & Ngai, 2008).

Past research has shown that knowledge sharing and learning behaviors can be beneficial for better performance in business process improvement and product and service offerings of a company (Law & Ngai, 2008). According to Bresman et al. (1999) the value of knowledge sharing in international firms can be especially high because foreign markets often provide access to new ideas and stimuli that can be applied in other countries. Although it is beneficial to a firm to share knowledge, it is not easily done among organizations with different cultures, structures and goals (Lee, 2001). As Bresman et al. (1999) argue it is already difficult to have a proper knowledge management of knowledge sharing between business units. The next level of difficulty would be sharing knowledge between departments or between sister units in the same country (Bresman et al., 1999). The difficulty of knowledge sharing arises when this is associated with the increase of geographical and cultural distance (Bresman et al., 1999). Therefore, in a partnership it is important to have clear common vision and goals (Lee, 2001). Furthermore, essential is partnership quality; the belief that their partner will not act opportunistically (Lee, 2001).

For social innovation in an organization it is vital that one has the same goals. The important goal here is to address the social needs, but at the same time it should be economically viable; this is a challenge that the IJV faces. Another challenge is to share knowledge between the partners, which is an important factor in both social innovation and IJV collaboration. Thus, knowledge sharing is of importance for the achievement of both the social and economic goals.

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2.4 Institutions in emerging countries

Institutions are seen as the rules of the game; it shows what the boundaries are and what can and cannot be done (Cantwell, Dunning & Lundan, 2010). Institutions have a direct influence on the firm’s strategy, how it should implement that strategy and how to create competitive advantage (Meyer, Estrin, Bhaumik & Peng, 2009). For firms this aspect is especially important in emerging countries, because institutional frameworks there differ enormously from the frameworks in developed countries (Meyer et al., 2009). Political stability and risk affect the decision whether to invest or not in a specific location (Jadhav, 2012). Political instability plays an important role in Foreign Direct Investment (FDI) (Groh & Wich, 2012). Emerging economies normally have weak institutions (Danis, Clercq & Petricevic, 2011).

Institutions have the role in market economy to support the effective functioning of the market mechanism, such that firms and individuals can participate in market transactions without incurring undue costs or risks (Meyer et al., 2009). Institutions are strong when they support the voluntary exchange underpinning an effective market mechanism (Meyer et al., 2009). In contrast, institutions are called weak when they fail to ensure effective markets or even undermine markets (Meyer et al., 2009). Therefore, weak institutions create uncertainty for firms (Cantwell et al., 2010). In other words, weak institutions haven’t clearly defined the rules of the game and firms entering the market do not have a clue on what the boundaries are.

Another function of institutions is that they provide information about business partners; how they are probably going to behave (Meyer et al., 2009). This leads to the reduction of information asymmetries, which is the main source of market failure (Meyer et al., 2009). Thus, the better the institutional framework, the better business can be conducted, which leads to lower costs of doing business (Meyer et al., 2009). Lower costs then influences the foreign entrant’s entry mode decision by moderating the costs of alternative organizational

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forms (Meyer et al., 2009). On the contrary, in emerging countries the institutions are weak then therefore lead to smaller, more volatile, and less liquid stock markets (Meyer et al., 2009). Here firms need to rely more on network- and relationship-strategies, where they then can develop the ability to enforce contracts, which are often informal, using norms in contrast to litigation (Meyer et al., 2009).

Furthermore, political resources are of importance. Political resources can be an important competitive advantage, because it is difficult for rivals to match (Frynas, Mellahi & Pigman, 2006). Reciprocity theory states that relationships are based on each partner’s motivational investment and future social gain (Frynas et al., 2006). In other words, the relationship is based on the fact that when one can’t benefit from the shared relation now, one can expect to have benefits from the relationship in the future. Therefore, reciprocity theory points out that the durability of business-government relationship (Frynas et al., 2006). Thus, the collaboration between an organization and the institutional framework can be of great help for the business performance of a firm. In this type of relation, knowledge is shared as well; mainly on how to operate in that institutional framework.

In conclusion, this chapter has taken a look at the importance of inclusiveness of all members in social innovation. One needs to work together, share information, brainstorm together and go beyond the normal boundaries of collaborations. The main opportunity here is that when going beyond the conventional collaborations, better insights can be given and that can lead to the creation of better solutions. However, when going beyond the normal standard, challenges can arise as well.

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Chapter 3: Theoretical framework

The concept of design thinking shows that the solutions for social problems should be addressed locally. However, as have been mentioned before, the local businesses do not have the knowledge to come up with proper solutions. While SMEs have the means to address social problems, they do not have the insights of what the social needs are exactly. Therefore, these two parties combined can make a real social impact.

According to Brouthers & Hennart (2007) joint internalization through joint ventures will happen when the complementary inputs contributed by two firms are more efficiently bundled by giving each input owner a claim on the result of the cooperation. Rather than only having one of the partners pay ex ante for the contribution by the other partner (Brouthers & Hennart, 2007). Past research on alliances between for-profit organizations in commercial environments have shown that each partner benefits when one brings resources, capabilities or other asserts that the other cannot easily obtain on its own (Dahan et al., 2010). In other words, the partners in the joint venture both expect to have an equal contribution that both partners can benefit from. The combined force create here should allow the IJV to synthesize its obtained resources, and make new applications from them (Dahan et al., 2010). Thus, in order to adequately respond to unfamiliar or rapid evolving environments they generate innovative responses within the IJV (Dahan et al., 2010). The same can be proposed for alliances between non-profit organizations. This effect will probably be even stronger when there is more knowledge sharing. Therefore, the knowledge sharing will play as a mediator between the economic orientation and economic achievement.

Hypothesis 1 (H1): Knowledge sharing will mediate the effect between economic achievement and economic achievement.

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Figure 1. Mediation model H1

Past Research has shown that the extent to which a recipient firm can benefit from IJVs depends on the level of their potential absorptive capacity (Pradhan & Lazaroiu, 2011). In other words, it depends how the IJV can learn from each other and thus share knowledge within the IJV. This goes for the economic orientation for the IJV as well as for the social orientation. The social goals that the IJV has set for the firm should be reached with more knowledge sharing. Thus, knowledge sharing plays an important part here as well and will mediate the effect between the social orientation of the firm and the social achievement.

Hypothesis 2 (H2): Knowledge sharing will mediate the effect between social orientation and social achievement.

According to Danis et al., (2011) emerging countries usually have weak institutions. This can be a disadvantage, because the institutions of a country are the rules of the game there (Cantwell et al., 2010). Therefore, with a weak institution one would not know how to adapt its firm and strategy to that certain country. However, a weak institution can also be an advantage, because when there are no rules, there are also no constraints. This means that the firm has the freedom to act as it sees fit. However, the help van the institutional framework can be of great help too. Therefore, the social goals that the firm has set will be easier reached when they firm has help from the institutional framework. Also, here is of importance that

Economic Orientation Knowledge sharing Economic Achievement Social Orientation Knowledge Sharing Social Achievement

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knowledge is shared in the IJV. Thus, knowledge sharing will mediate the effect between the help from the institutional support and the social achievement of the firm.

Hypothesis 3 (H3): Knowledge sharing will mediate the effect between the institutional support and social achievement.

An organization that is willing to learn and share knowledge within the firm is believed to generate competitive capabilities to sustain its business performance (Law & Ngai, 2008). According to Law & Ngai (2008) sharing knowledge will lead to improvements in market sensing and innovation activities. This thought is in line with Brown & Wyatt (2010) concept of design thinking that will help them in developing better solutions. Lee (2001) points out that knowledge sharing between organizations with different cultures, structures and goals will be challenging. This is the case for joint ventures that are formed between Dutch and Asian companies. To overcome this challenge, institutional support can over bridge this problem and help in realizing its social goals. Therefore, the institutional support will mediate the effect between the social orientation and the social achievement of the firm.

Hypothesis 4 (H4): The institutional support will mediate the effect between social orientation and social achievement.

In the achievement of economic goals the institutional framework can be regarded as an important aspect as well. The institutional framework can be a disadvantage or advantage for the firm in doing business in a foreign country. Thus, the institutional framework can help

Institutional support Knowledge tranferred Social Achievement Social Orientation Institutional support Social Achievement

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with the business performance of a firm. In other words, help achieve its economic goals it has set for the IJV. As mentioned before, knowledge sharing can be beneficial for a company’s business performance as well. Therefore, knowledge sharing can have a mediate effect on the relation between the institutional support and economic achievement of a firm.

Hypothesis 5(H5): Knowledge sharing will mediate the effect between the institutional support and economic achievement.

The whole model can be seen in Figure 6 where knowledge sharing is central:

Figure 6. Conceptual framework Institutional Support Knowledge Sharing Economic Achievement

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Chapter 4: Research design

The main research question is: ‘What is the influence of knowledge sharing to the economic and social impact of SMEs in IJV in emerging countries in Asia?’. This research will be conducted through a quantitative data analysis methodology. Data will be collected from the PSI project from the Netherlands Enterprise Agency. The focus is on Asian emerging countries, the participating firms will have to be of Western origin and have a partner from Asia.

4.1 Method

For the quantitative data analysis methodology, the main model that will be used is the mediation analysis. Mediation analysis looks for the mechanisms that underlie an observed relationship between an exposure variable and an outcome variable and investigates how these two relate to a third intermediate variable, the mediator (Valeri & VanderWeele, 2013). In other words, rather than having only a direct causal relationship between the independent variable and the dependent variable, a mediation model hypothesizes that the independent variable causes the mediator variable, which in turn causes the dependent variable (Valeri & VanderWeele, 2013). The mediation analysis tests the decomposition of a total effect into direct and indirect effects (Valeri & VanderWeele, 2013).

The following criteria are needed for a variable to be considered a mediator (see Figure 1): (a) a change in levels of the exposure variable significantly affects the changes in the mediator (the path from X to M) ; (b) there is a significant relation between the dependent and mediator variable (the path from M to Y) ; (c) a change in levels of the independent variable significantly affects the changes in the dependent variable; and (d) when the previously defined paths are controlled, a previously significant relationship between the dependant and independent variable is no longer significant, with the strongest demonstration

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of mediation occurring when the path from independent variable to the outcome variable is zero (Valeri & VanderWeele, 2013). In Figure 7 and 8 it is displayed how the mediating variable works. The total effect (path c) is decomposed into a direct effect (path c’) and an indirect effect (path a x b), thus: c= (a x b) + c’.

Figure 7. Regression model

Figure 8. Mediation model

4.2 Data collection

I will use the data collected by the Private Sector Investment Programme (PSI), which contains the organizations that have set up an IJV related to social innovation. Luckily, I have been granted access to the PSI project and can make use of their data. Thus, I will be working with secondary data. The PSI project is a project set up from private investors in collaborations with the government: Netherlands Enterprise Agency. Thus, the project is supported by the Ministry of Foreign Affairs. This collaboration has a number of programs and has different grant schemes available to support various business initiatives. The PSI project is one of its programs that support innovative investment projects in developing countries. The objectives of PSI are to stimulate financial growth, create employment opportunities and generate income. In other words, the companies are chosen on the basis of their potential of having the ability to combine social and economic goals. The data file contains 42 companies who fit this profile.

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4.3 Measures

There various variables that are used in this research. These will be listed below: Project duration is measured in months. This means that the months that the IJV has been active are accounted for.

Ownership Share is measured in the percentage that one partner has in the IJV. For this research the ownership share of the applicant will be used to conduct analysis. The reason here for is that these are the SMEs that apply for the PSI project and therefore are the ones that in charge of the business plan.

Economic Orientation is measured through the sales they propose to achieve in Euros. Economic Achievement is measured through the actual sales achieved in Euros. Knowledge Sharing is measured through the number of employees that have been trained. This means that the number of employees will show how many knowledge has been shared in the IJV.

Social Orientation is measured on a scale of 1 to 6 derived from the business plan. The social orientation is about the plans that the organizations have to socially impact the local community. In other words, it’s about the goals that the firms have set for themselves to create social impact. The scale is set up as follows: (1) product/service social embeddedness, (2) surrogating role, (3) filling market failures, (4) social innovation, (5) knowledge transfer and (6) environmental effects. Product/service social embeddedness corresponds to the purpose of the IJV to manufacture and/or introduce a service which will be beneficial for the local community as a whole. The surrogating role is about how the IJV can step in to provide solutions that fill institutional voids. Filling market failures corresponds to the capacity of the IJV to create links for building a supply chain. Social innovation responds to the capacity of the IJV to create indigenous solutions to fulfill basic needs. Knowledge transfer is the intention to invest in training in the IJV. Environmental effects concerns how the IJV

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expresses interest in protecting the environment.

Country corresponds to the participating emerging countries in Asia. The scale is as follows: (1) Bangladesh, (2) China, (3) Philippines, (4) India, (5) Indonesia, (6). Mongolia, (7) Thailand and (8) Vietnam.

Institutional Support is measured on a scale from 1 to 4. The scale is derived from how the embassy regards the project. The scale is as follows: (1) positive view of the project, (2) negative view of the project, (3) neutral opinion on the project and (4) the project doesn’t fit with the PSI program.

Institutional Support to the IJV is measured on a scale from 1 to 6. This measure shows what the embassy liked or disliked about the project business plan. The scale is as follows: (1) employment opportunities, (2) CSR, (3) no local market distortions, (4) introduction of new technology/service/product, (5) the business plan have aspects that have to be further worked out and (6) environmentally friendly. The first category corresponds to the employment opportunities is has for the local community. The second category looks on how the CSR program of the project will benefit the local community. The third category looks on how the project will not distort the local market, in other words, the project will not negatively influence local businesses. The fourth category corresponds to the benefit to the local community with the introduction of new technology, service or product. The fifth category is about the business plan that isn’t fully complete and should be worked out in further detail. The last category corresponds to the positive effect it will have on the environment.

Social Achievement is measured in terms of employment. In other words, this measures the actual social impact that the IJV has. This means that the number of people that have been employed by IJV corresponds with the social achievement of the IJV. The reason for this measure is that employment opportunities show a direct social impact in the local

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community.

Experience between partners is about whether the partners in the IJV have known each other before this collaboration or not.

Influence of the project is about how the project will influence the local community according to the embassy. This is done on a scale of two: (1) positive influence on the local community and (2) neutral influence, thus no positive or negative influence.

Industry has been split into two categories: (1) agriculture and (2) other. The reason for having only two categories is that the sample size is small.

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Chapter 5: Results

This chapter will show the results of the quantitative data analysis done in SPSS. In Table 1 are the descriptives from all the variables on the 42 IJVs. From this table it is clear that there are missing values from several variables. Only for project duration, country, experience between partners and industry, the sample is complete. Especially for economic achievement and institutional support to the IJV the sample has only a little more than half available values. This could have problems for analyzing the data in SPSS and therefore interpreting the results should be done carefully. Furthermore, for economic orientation, economic achievement and knowledge the distribution is very diverse when looking at the minimum and maximum that the variable can have. Because the distribution is so diverse, the reliability of the variable could be lower and lead to consequences for the outcome of the tests that will be run.

Table 1. Descriptives

N Min Max Mean SD

1. Project Duration 42 14 70 37.17 12.776 2. Ownership Share 38 20 100 55.0132 21.161 3. Economic Orientation 32 500 9000000 1048700 2149390 4. Economic Achievement 26 595 5500000 789615 1187480 5. Knowledge Sharing 30 5 2350 223.27 544.488 6. Social Orientation 35 1 5 2.97 1.636 7. Country 42 1 8 4.52 2.634 8. Institutional Support 35 1 4 1.29 .789

9. Institutional Support to the IJV 27 1 6 4.15 1.350

10. Social Achievement 33 2 448 66.88 82.243

11. Experience between Partners 42 0 1 .74 .445

12. Influence of the Project 13. Industry 27 42 0 0 1 1 .67 .26 .480 .445

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Variable 1 2 3 4 5 6 7 8 9 10 11 12 13

1. Project Duration Corr. Sig.

N

1 42 2 Ownership Share Corr.

Sig. N -.309 .059 38 1 38 3 Economic Orientation Corr.

Sig. N -.144 .432 32 -.052 .785 30 1 32 4 Economic Achievement Corr.

Sig. N -.282 .162 26 .516* .012 23 .248 .231 25 1 26 5 Knowledge Sharing Corr.

Sig. N .166 .542 30 -.380 .050 27 -.114 .557 29 .009 .967 25 1 30 6 Social Orientation Corr.

Sig. N .040 .819 35 .230 .205 32 .041 .825 32 .126 .540 26 -.344 .063 30 1 35 7 Country Corr. Sig. N -.170 .282 42 .208 .211 38 -.141 .440 32 .331 .099 26 .088 .645 30 .188 .279 35 1 42 8 Institutional Support Corr.

Sig. N -.129 .460 35 -.174 .350 31 .527** .002 32 .171 .403 26 -.065 .732 30 -.120 .500 34 -.111 .526 35 1 35 9 Institutional Support to the IJV Corr.

Sig. N .197 .324 27 -.265 .211 24 .231 .257 26 -.045 .842 22 -.008 .968 25 -.230 .258 26 .051 .800 27 .249 .210 27 1 27 10 Social Achievement Corr.

Sig. N .110 .542 33 -.188 .319 30 .113 .538 32 -.020 .924 26 .031 .870 30 -.356* .042 33 -.182 .311 33 .544** .001 33 .162 .4296 26 1 33 11 Experience between Partners Corr.

Sig. N .107 .502 42 .231 .163 38 .205 .260 32 .206 .312 26 -.457* .011 30 .075 .070 35 -.255 .104 42 -.063 .721 35 .125 .534 27 .094 .602 33 1 42 12 Influence of the Project Corr.

Sig. N .244 .261 27 .103 .633 24 -.279 .177 25 -.024 .918 24 .191 .371 24 -.009 .966 25 .104 .605 27 -.544** .004 26 -.217 .288 26 -.157\ .453 25 .270 .174 27 1 27 13 Industry Corr. Sig. N .001 .996 42 -.249 .131 38 -.217 .234 32 .049 .811 26 .455* .012 30 -.332 .052 35 -.099 .532 42 .068 .698 35 .099 .624 27 .086 .634 33 -.138 .384 42 .167 .406 27 1 42

*. Correlation is significant at the 0.05 level (2-tailed) **. Correlation is significant at the 0.01 level (2-tailed)

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In Table 2 are the correlations between all the variables. It is important to show the number of cases that are present for a variable, because of missing values. Therefore, in Table 2 the N is added for more clarity on the correlations, on how many cases it is based. There are several correlations found between the variables.

There is a positive correlation (.516) between economic achievement and ownership share at a significance level of p<.05. This can be considered to be a logical relationship, because economic realization is a goal that both the partners have. Also, there is a positive correlation found between institutional support and economic orientation at a significance level of p<.01. This positive relation can be seen as logical as well, because the two variables should move in the same direction. Furthermore, there is a negative correlation (-.457) found between experience between partners and knowledge sharing at a significance level of p<.05. The relation here found is quite surprising that the two variables move in opposite directions. One would assume that past experience between partners moves in the same direction as knowledge sharing. However, this doesn’t mean that this implies causation between the two variables. In addition, there is a negative correlation (-.356) among industry and knowledge sharing at p<.05. Moreover, a negative correlation is (-.544) found between social achievement and institutional support at as significance of p<.01. The correlation here found is not what one would expect, because these two variables imply dependence on each other. Yet, the two variables are moving in the opposite direction.

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32 Variable N % Country 1. Bangladesh 7 16.7 2. China 8 19.0 3. Philippines 1 2.4 4. India 4 9.5 5. Indonesia 7 16.7 6. Mongolia 1 2.4 7. Thailand 5 11.9 8. Vietnam 9 21.4 Total 42 100 Institutional Support

1. Positive view of the project 30 85.7

2. Negative view of the project 2 5.7

3. Neutral opinion of the project 1 2.9 4. Project has no fit with the PSI program 2 5.7

Total 35 100

Institutional Support to the IJV

1. Employment opportunities 2 7.4

2. CSR 1 3.7

3. No local market distortions 3 11.1

4. Introduction of new technology/service/product 10 37.0 5. The business plan has aspects that has to be further worked out 7 25.9

6. Environmentally friendly 4 14.8

Total 27 100

Influence of the Project according to the Embassy N %

1. Positive influence 18 66.7

2. Neutral influence 9 33.3

Total 27 100

Experience between partners N %

1. Yes 31 73.8

2. No 11 26.2

Total 42 100

Table 3. Frequencies

In Table 3 it can be seen that are eight participating countries from Asia: Bangladesh (7), China (2), Philippines (1), India (4), Indonesia (7), Mongolia (1), Thailand (5) and Vietnam (9). These are all countries that having emerging economies.

In Table 3 it is clear that overall the projects are regarded as positive (85.7%) by the embassy. Although the embassy had a negative or neutral view of the business plans of three IJVs, the PSI program did grant them financial support.

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In Table 3 the institutional support to the IJV by the embassy can be seen. The most projects were seen as positive due to introduction of new technology, service or product to the local community. Furthermore, it is clear that even though most projects were regarded as positive (seen in Table 4) the business plan wasn’t entirely complete according to the embassy and needed to further worked out.

In Table 3 the embassy regarded two-thirds (66.7%) of the business plans as having a positive influence on the local community. This means that they believe the local community will only benefit from the establishment of the IJV there.

In Table 3 the experience between partners is displayed. Here it evident that most partners have known each other before the set up of the IJV (73.8%). That is probably also the reason for choosing one another to enter to together in this IJV and apply to the PSI program.

In order to tests the hypothesis made for the conceptual model, the mediation model is run. The main variable is knowledge sharing and through the use of the mediation model, it will become clear whether this variable will play an important role in the economic and/or social goals of an IJV. The mediation analysis will be tested through using the regression analysis. The Adjusted R2 is used to compensate for the addition of variable to the regression

model. The Adjusted R2 gives you the percentage of variation explained by only the

independent variables that actually affect the dependent variable. In Table 4 it can be seen that the overall Adjusted R2 is low, which indicates that the regression model is only

explained for a small part by the independent variable. However, this does not indicate whether the regression model is inadequate.

Furthermore, the F-value is given. The F-value is the ration of two mean squares. For this model the degrees of freedom is 1 or 2, because the mediation model is used. Thus if the hypothesis is correct, it is expected that the F-value to be close to 1. When the F-value is large,

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that means that the variation among the group means is more than you’d expect to see by chance and thus is mostly seen with a hypothesis that is wrong. A large F-value is also seen when random sampling happened to end up with large values in some groups and small values in others. In Table 4 it can be seen that the overall F-value is larger than 1, this can be due to the distribution of the variables (see Table 1).

In Table 4 the mediation model is run for all the hypotheses and the results are put in one table together. These results will be discusses further below with the use of the beta-value and significance level.

Adj. R2 F β Sig.

Hypothesis 1

Regression: Economic Orientation on Economic Achievement .201 2.387 .278 .184

Regression: Economic Orientation on Knowledge Sharing .240 3.049 -.027 .884

Regression: Knowledge Sharing on Economic Achievement controlling for Economic Orientation

.230 2.257 .337 .277

.191 .185

Hypothesis 2

Regression: Social Orientation on Social Achievement .099 4.510 -.356 .042

Regression: Social orientation on Knowledge Sharing .087 3.749 -.344 .063

Regression: Knowledge Sharing on Social Achievement controlling for Social Orientation

.041 1.618 -.347 -.088

.085 .654

Hypothesis 3

Regression: Institutional Support on Social Achievement _.273 _13.038 _.544 _.001 Regression: Institutional Support on Knowledge Sharing -.031 .120 -.065 .732

Regression: Knowledge Sharing on Social Achievement controlling for Institutional Support

.248 5.788 .548 .067

.002 .681

Hypothesis 4

Regression: Social Orientation on Social Achievement _.099 _4.510 _-.356 _.042 Regression: Social Orientation on Institutional Support _-.016 _.466 _-.120 _.500 Regression: Institutional Support on Social Achievement

controlling for Social Orientation

.345 9.418 -.301 .512

.045 .001

Hypothesis 5

Regression: Institutional Support on Economic Achievement -.011 .724 .171 .403

Regression: Institutional Support on Knowledge Sharing _-.031 _.120 _-.065 _.732 Regression: Knowledge Sharing on Economic Achievement

controlling for Institutional Support

-.053 .400 .188 .026

.381 .903

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Hypothesis 1 (H1) tests whether knowledge sharing will mediate the effect between economic orientation and the economic achievement of the IJV. At the same time controlling for project duration, ownership share and experience between partners. The results showed in Table 4 and Figure 9 (in the Appendix) shows that there is no mediation effect. The mediation model shows that the regressions run are not significant. Furthermore, using the equation of the mediation model as discussed in the method section (c= (a x b) + c’), the beta it shows that the mediation effect is very minimal (-.027 x .277=-.007). This means that the strength of the direct or non-mediated path from economic orientation to economic achievement will decrease with -.007 for one-standard deviation increase in sales proposed. Also, looking at the F-values in the models, it shows that they are very high. Therefore, H1 is rejected.

Hypothesis 2 (H2) examines whether knowledge sharing has a mediate effect between the social orientation and the social achievement of the project. The results showed in Table 4 and in Figure 10 (in the Appendix) indicate that this is not the case. Unfortunately, the results run in SPSS show that this relation is not significant. Also, when not looking at the significance level and just at the beta (-.344 x -.088=0.03), this indicate that the mediation effect is minimal as well. Furthermore, taking the Adjusted R2 into account, there is a

decrease in the values. Moreover, the models have high F-values. Therefore, H2 is rejected.

Hypothesis 3 (H3) tests whether knowledge sharing has a mediate effect between the institutional framework approval and social achievement of the project. In Table 4 and Figure 11 (in the Appendix) it can be seen that the regression analysis run between the independent variable (institutional framework approval) and the dependent variable (social achievement) is significant (p=.001). This means that institutional framework approval will predict an increase of .544 per one social achievement. However, when adding the mediation variable to the model, it becomes insignificant. When looking at the equation (-.065 x .067 = -.004), the mediation path has a minimal effect on the relation between the dependent and independent

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variable. Moreover, taking the F-values into account, you see that there is no consistency among the values, it is either extremely high (F=13.038) or extremely low (F=.120). The addition of the mediation variable still shows that the F-value (F=5.788) is not near 1.Therefore, H3 is rejected.

Hypothesis 4 (H4) examines the mediation effect of the institutional framework approval between the social orientation and the social achievement of the IJV. The results showed in Table 4 and Figure 12 (in the Appendix) that the relation between social orientation (independent variable) and social achievement (dependent variable) is significant (p=.042). There is no significance found between the relation between the independent variable and mediation variable (p=.500). However when all three variables are together in the model it is significant (p=.001). This means that there is a mediation effect. Furthermore, when you look at the effect of the mediation (-.120 x .512 = -.06) it is very minimal. Thus, only partial mediation is tested for here. However, the significance level for this model is very high (p<.001). Furthermore, the Adjusted R2 increases in the mediation model. Therefore, H4 is

accepted.

Hypothesis 5 (H5) tests whether the mediator variable knowledge sharing plays a role between the relation of institutional framework approval and economic orientation. In Table 4 and Figure 13 (in the Appendix) it can be seen that the results are not significant. When the significance level is not taking into account, it can be seen that the mediation level is minimal (-.065 x .026 = 0.002). Furthermore, the F-value is not near 1 as well, expecting the hypothesis to be wrong. Therefore, H5 is rejected.

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Chapter 6: Discussion

This chapter will discuss the results into more detail and give more elaborate explanation and link back to the literature review. In the model presented in the theoretical framework (see Figure 1) knowledge sharing is central. The objective was to examine what the importance of knowledge sharing would be as a mediating variable between certain relations. In the results section we have seen that four out of five hypotheses are rejected from this research. This means that according to this study knowledge sharing is not of relevance for the economic and social impact of the SMEs in IJV in emerging countries in Asia.

Hypothesis 1 proposed a mediating effect of knowledge sharing between economic orientation and economic achievement. However, in the results it is shown that there is no significant relation among the three variables (see Table 4). It is remarkable that there is no significant relation found between economic orientation and economic achievement, because it is logical that these two variables are associated with one another. Previous studies have shown the benefits of knowledge sharing; one common finding was the improvement on one’s business performance. This result contradicts the research done by Law & Ngai (2008) that predicts that knowledge sharing will help sustain an organizations business performance. Furthermore, it contradicts the finding that Bresman et al. (1999) that knowledge sharing in joint ventures is the key to success for the organization. This could be due to the fact that for economic achievement the data was only available for 26 of the 42 participating companies. Knowledge sharing is measured in employees that have been trained. This should help with the realization of the economic orientation; because the more people that are trained to their jobs and the better the IJV will run. An explanation for this could be that the sample size is too small to find significant results in the data.

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Hypothesis 2 tests for how knowledge sharing can be a mediating variable between the social orientation and social achievement. The results have shown that this does not uphold. This contradicts with previous studies; social innovation is about the interaction between all parties (Mumford, 2002). In other words, social innovation is about sharing knowledge among all members involved. As Mumford (2002) states social innovation is about the active exchange of information. That should lead to better ideas and solutions to create social impact. Furthermore, Bresman et al. (1999) state that knowledge sharing is important the success an organization. In this setting, this it would be that knowledge sharing is essential for the achievement of the social goals. However, the findings cannot confirm this. Interesting to see is that the three variables are negatively related to one another (see Table 4), especially for the relationship between social orientation and social achievement. Logically these two variables should be in line, however according to the data an increase in social orientation is a decrease in social achievement. An explanation here for could be that the social achievement is measured in number of employees and social orientation is measured in terms of the goals that the IJV has. The latter is a qualitative assessment of the variable and the other is a quantitative based. In this case, one should expect a positive relation between knowledge sharing and social achievement; because both variables are measured in number of employees. However, here is no significant relation found either.

Hypothesis 3 examines the mediating effect of knowledge sharing between the institutional support and social achievement. The results have shown that this is not the case. Institutional support and social achievement have been tested to be significantly related (see Table 4). This is line with what has been proposed; as Leadbeater’s (2007) example of a social enterprise. The involvement of institutional support should help the IJV achieve its social goals. Governmental bodies can help a social enterprise not only getting financial funding, but as well as connect the social enterprise with the right fit with other for-profit or

The influence of knowledge sharing to the economic and social impact of SMEs in IJVs in emerging countries in Asia