Knowledge Transfer in the Automotive Industry: The Case of JICA’s Project for Automotive Supply Chain Development in Mexico

Abstract

The automotive industry  is considered a source for economic development in both developed and developing countries. However, endogenous firms in developing countries may not reap the positive externalities of entering global production chains due to their technological and knowledge deficien- cies. This is particularly noticeable for Japanese production chains that demand high-quality parts and components and favors the procurement from companies from the same business group, limiting the opportunities for local firms. Training may help reduce this gap by transferring both tacit and explicit knowledge. This analysis provides evidence that institutions such as government agencies may affect the transfer of knowledge to local firms at the micro-level via training. The results from qualitative case studies show benefits from a training project carried out by the Japan International Cooperation Agency (jica) in Mexico. Participating firms expe- rienced overall growth and improvements in their quality and productivity indicators, allowing them to obtain certifications, increase their  customer base and diversify to new markets. The knowledge acquired was internalized and diffused throughout the firms and in certain cases spilled-over to other production lines and other companies.