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Wanida Wadeecharoen 1 , Athiwat Kanjanavanikul 2 and Sombat Teekasap 3

Burapha University International Conference 2014 July 3-4, 2014, Pattaya, THAILAND. 1. MANAGING JAPANESE-THAI PARTNERSHIPS COMMITMENT AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISE (SMEs) INTERNATIONAL JOINT VENTURES (IJVs) IN THAILAND INDUSTRIAL SECTORS.

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Wanida Wadeecharoen 1 , Athiwat Kanjanavanikul 2 and Sombat Teekasap 3

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  1. Burapha University International Conference 2014 July 3-4, 2014, Pattaya, THAILAND 1 MANAGING JAPANESE-THAI PARTNERSHIPS COMMITMENT AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISE (SMEs) INTERNATIONAL JOINT VENTURES (IJVs) IN THAILAND INDUSTRIAL SECTORS Wanida Wadeecharoen1, Athiwat Kanjanavanikul2 and Sombat Teekasap3 1,2 Faculty of Business Administration, Thonburi University, Bangkok, Thailand 3 Faculty of Engineering, Eastern Asia University, Bangkok, Thailand

  2. Topics of Presentation • 1. Introduction • 2. Objective of the research • 3. Conceptual framework • 4. Research method • 5. Research Finding • 6. Conclusions and Discussion

  3. Introduction-1 • Japanese investors are performing as a major player to sustainable of Thailand economic holistically. The number of Japanese IJV projects and its investment are trend to increase by year after year. Particularly in 2011 Japanese IJV has boost up to 480, an increase of 138 project or 29 percent from 2010. Moreover, the number of Japanese IJV reaches nearly 300 projects in the first 6 months of year 2012, this is involved 60 percent compare to year 2011 (refers to table 1). Table 1: Japanese IJV Projects Submitted to BOI

  4. Introduction-2 Table 2: Japanese IJV Projects Classified by Investment Size

  5. Introduction-3 Table 3: Japanese Investment Projects Approved by BOI classified by Sector

  6. Introduction-4 • The largest of foreign direct investment (FDI) inflows came from Japan and continue keep on going increase from 1,362 Million USD in 2009 before reach to 4,561 in 2011 (Wadeecharoen, Kanjanavanikul, Lertnaisat & Teekasap, 2012). • The large amount of Japanese FDI mainly engaged in Thailand manufacturing as its presenting in the form of SME IJV. • By the use of IJV mode, local partner can acquire better access to advance technology, marketing distribution management to move up into the higher quality stepladder • In reality, the questioned here is ‘does the foreign firm willing to share such knowledge and transfers of core technology with their local partner ’. As of this point of view become a critical issues of partners disputation and finally cause to terminated of partners relationship (Millington & Bayliss, 1999).

  7. The Definition of SME The definition of Small and Medium Enterprise (SMEs) are defined by the number of employees and fixed capital. Despite, in different countries are defined the concept of SME differently. Table 2 classified the definition of SME in Japan and Thailand measured by number of employee, company assets and investment capital. Table 4: The definitions of SME in Japan & Thailand Source: Adapted from Wadeecharoen, Kajanavanikul, Lertnaisat & Teekasap, (2012)

  8. Objectives of the research 1. To examine of Japanese investment inflow via IJV Strategy in Thailand industrial sectors 2. To examine the role of Thai – Japanese partner relationship in Thailand SME JIVE 3. To investigate the success factors of Japanese SME IJV in Thailand 4. To examine the mediating commitment between Thai- Japanese partners in Thailand SME IJV

  9. H2 MO Commitment H4 H1 H3 SME IJV Performance RESEARCH MODEL • This study representing the research model of partner relationship by highlighting the significant effect of RMO consists with ‘bounding, empathy, reciprocity and trust’ and SME IJV performance. Since RMO is determine to have a direct and indirect positive impact on SME IJV performance. Hence, this study intent to test relationship quality of IJV partners by hypothesizes the linkage relationship into 4 hypotheses as exhibited in the figure below;

  10. Research methods • Sampling and Research Setting • Research instrument • Data collection • Statistical and Data analysis

  11. Sampling and Research Setting • Proportionate stratified random sampling was used when the sample of the study was taken from identified groups or subgroups. • The list of the companies name making up from Thailand Company Information (2010-2011) and Factory Directory in Thailand (2011). • Such identified group of the study were SME IJVs in industrial sub-sectors (Black, 1999). This method was used with 350 SME IJV where these companies having a number of employee less than 200, foreign capital at least 10 percent and total investment less then 500 million Bath. • IJV general manager (IJV GM) or IJV managing director (IJV MD) were selected as the research respondent, this is because he/she is the key person who knows about IJV management and considered as information gatekeepers (Julian, 2008; Julian & O’Cass, 2005: 2004: 2002).

  12. Research Instrument • The instrument developed for this study is adopted from past prominent studies in the area of IJV setting. • SME IJV performance measured by 6 items adapted from Cullen et al, (1995) and Thuy & Quang, (2005). The cronbach alpha is 0.90. • Commitment measure by 4 indicators developed by Cullen, Johnson & Sakano, (1995), cronbach alphas is 0.87. • MO 12 items adapted from Narver & Slater, (1990). The cronbach alpha is 0.88.

  13. Data collection • The research information data was gathered from both Japanese and Thailand representative of SME IJV firms. • 350 questionnaires were sent to 350 Japanese-Thai SME IJV companies address list by Thailand Company Information (2010-2011) and Factory Directory in Thailand (2011). • After two week, a non-responding companies were follow-up by phone call for remind them to fulfill the questionnaire. The next couple weeks a total of 154 responded cases were return, approximately 44 percent of respondent rate was received.

  14. Statistical and Data analysis • A total 154 date set was return and compute into SPSS data set for the data analysis. • A descriptive analysis method was used to explore the respondent composition follow by reliability analysis to test a reliable of each variable construct. • Finally, these 154 data cases were analysis through AMOS to test a fix of research model and hypothesis respectively.

  15. Research Finding • A total of 154 respondents which are from 65 Thai representatives and 89 Japanese partner representatives of SME IJVs . • This is because of some difficulty to obtain the data from both sides of IJVs. Since IJV broad of director was appointed IJV GM to monitoring IJV diary operation, IJV GM from both sides will be cooperation, interaction of information regarding to those specific content. • Thus, both partners side are representing as same as one IJV unity and the data collected from each side consider as same as one. Table 4: Partner Representative

  16. Research Finding Table 5: Responses Composition by Industrial sectors

  17. Research Finding • The majority of Japanese capital is ranking between 26 to 75 percent or accumulated 71 percent while only 26 percent of IJV firms having Japanese capital over 76 percent. This is sufficient to justify that both Japanese and Thai local partner are dependency coordinating with each other. • Table 6: Japanese SME IJV Capital Note: 1) Japanese investment projects refers to projects with Japanese capital of at lest 10% International Affairs Bureau., BOI

  18. .64 e12 MO12 .60 e11 MO11 .57 .80 e10 MO10 .37 .77 .62 E50 e13 COMMIT13 .75 e9 MO09 .61 .42 .58 .79 .45 .65 .76 e14 COMMIT14 .67 e8 MO08 .46 MO .64 Commitment .68 .80 e15 COMMIT15 e7 MO07 .64 .78 .41 .60 .77 COMMIT16 e16 e6 MO06 .76 .60 .78 e5 MO05 .57 .80 .79 e4 MO04 .61 e3 MO03 .19 .72 .65 e2 MO02 .62 e1 MO01 .46 IJVBP17 e17 .44 .68 E90 IJVBP18 e18 .66 .50 .74 .71 IJVBP19 e19 .53 BP .73 IJVBP20 e20 .75 .57 .77 IJVBP21 e21 .60 IJVBP22 e22 cmin:225.270 df:206 p:.170 ratio:1.094 GFI:.891 rmsea:.025 RESULTS OF THE STUDY Figure 1: Hypothesis Model

  19. RESULTS OF THE STUDY • Bases on table 10 shows the statistics finding of direct effect between market orientation (MO), relationship marketing orientation (RMO) and SME IJV business performance. From the results, MO has no direct significant relationship with SME IJV business performance, thus H1 was rejected (C.R.>1.835),. In other side, H2; H3 were accepted based on the C.R. values over than 1.96 (C.R.>1.96), respectively. The P-value level is below than 0.10 which indicated the significant status of all hypotheses exceptionally. Table 10: Hypothesis Testing of Hypothesis Model (Direct Effect)

  20. RESULTS OF THE STUDY • Table 11 shows the mediating effect of relationship marketing orientation (RMO) with between MO and Japanese-Thai SME IJV business performance, thus, H4 was accepted. Table 11: Hypothesis Testing of Hypothesis Model (Indirect and total Effect)

  21. RESULTS OF THE STUDY • Table 8 shows the relationship marketing orientation (RMO) having mediating relationship between MO with Japanese-Thai SME IJV business performance, thus, H4 was accepted. Table 8: Hypothesis Testing of Hypothesis Model (Indirect and total Effect)

  22. CONCLUSION & DISCUSSION • To make Japanese-Thai SME IJV success, IJV partners must be oriented with their partners in order to achieve IJV mutual goals and objectives. • The relationship between MO and commitment is well being U shape, the low and high of MO level is related to SME IJV profitable. Thus, the highest level of MO leads to highest profitability while lowest MO leads to lowest profitability (Narver & Slater, 1990). • The high degree of partner’s commitment created of IJVs organization synergy which lead to higher business performance and hence contribute to organization competitive advantage. • IJV partnership commitment has intermediating relationship effect between MO and SME IJV business performance which is finally leading IJV to achieve its objectives (Sung, 2012). • Thus, IJV partner commitment could be justify as the tool for creating company competitive advantage since the IJV was established from minimum two expertise firms

  23. Burapha University International Conference 2014 Research Title: MANAGING JAPANESE-THAI PARTNERSHIPS COMMITMENT AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISE (SMEs) INTERNATIONAL JOINT VENTURES (IJVs) IN THAILAND INDUSTRIAL SECTORS 23 • Commendation & suggestion

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