Moderating Effect of MNCs’ Equity Ownership in the Relationship Between Degree of Inter-Firm Technology Transfer and Local Firms’ Performance

Sazali Abdul Wahab

doi:10.2139/ssrn.1954230

Abstract

The inter-firm technology transfers (TT) through international joint ventures (IJVs), among others, have significantly contributed to a higher degree of local innovation performance/capabilities, technological capabilities, competitive advantage, organizational learning effectiveness, productivity, technological development of local industry, and the economic growth of the host country. Since the focus of inter-firm TT in developing countries has shifted to degree of technology transfer, organizations in developing countries are attempting to assess not only the significant role of technology transfer in strengthening their corporate and human resource performance but also the influence of other critical variables such as MNCs’ size, age of JVs, country of origin, MNCs’ equity ownership (MNCEQTY) and MNC’s type of industries that could significantly moderate the relationship. Based on the underlying knowledge-based view (KBV) and organizational learning (OL) perspectives, the main objective of this paper is to empirically examine the moderating effect of equity ownership of MNCs (50/50 equal ownership between MNCs and local JV partners vs. minor/majority ownership by MNCs) in the relationships between degree of inter-firm technology transfer and two dimensions of local firms’ performance: corporate (CPERF) and human resource (HEPERF) performances. Using the moderated multiple regression (MMR) analysis, the theoretical models and hypotheses in this study were tested based on empirical data gathered from 128 joint venture companies registered with the Registrar of Companies of Malaysia (ROC). The results revealed that equity ownership of MNCs has been established to provide a significant moderating effects in 1) TTDEG-CPERF relationship; where the relationship was found stronger for minor/majority ownership by MNCs as compared to 50/50 equal ownership between JV partners, and 2) TTDEG-HRPERF relationship; where the relationship was found stronger for 50/50 equal ownership between JV partners as compared to minor/majority ownership by MNCs. The study has bridged the literature gaps in such that it offers empirical evidence and new insights on the significant moderating effects of equity ownership of MNCs in the relationships between degree of inter-firm technology transfer and local firms’ performancetechnology using the Malaysian sample.

Highlights

This R2 means that 45.5% of the variance in the CPERF is explained by TTDEG scores and MNCEQTY
Model 2 shows the results after the product term (TTDEG*MNCEQTY) was included in the equation
This R2 means that 54.2% of the variance in the HRPERF is explained by TTDEG scores and MNCEQTY

Summary

Introduction

Regardless whether tacit or explicit technology, will positively 1) lead to a higher potentials of innovation performance/capabilities (Guan et al, 2006; Kotabe et al, 2007), 2) increase technological capabilities (Kumar et al, 1999; Madanmohan et al, 2004), 3) enhance organizations’ competitive advantage (Liao and Hu, 2007; Rodriguez and Rodriguez, 2005), 4) enhance organizational learning effectiveness (Inkpen, 2000; Inkpen and Dinur, 1998), 5) improve productivity (Caves, 1974; Liu and Wang, 2003), 6) increase technological development of local industry (Markusen and Venables, 1999), and 7) improve the economic growth of the host country (Blomstrom, 1990). H2: The equity ownership of MNCs moderates the relationship between degree of inter-firm technology transfer and local firms’ human resource performance

Objectives

Methods

Results

Conclusion