Extent Of Technology Transfer Research Articles

The mirage of upgrading local automotive parts suppliers through the creation of vertical linkages with MNEs in developing economies

Purpose– This paper aims to explore inter-organizational linkages and the extent of technology transfer and develop propositions related to the linkages, technology transfer and upgrading of local suppliers in developing economies.Design/methodology/approach– The authors conduct a literature review and 50 exploratory interviews with senior managers and policymakers in the automotive parts industry of Pakistan.Findings– The data revealed that three major international joint ventures (IJVs) established in the automotive industry of Pakistan have created significant vertical linkages. However, advanced high-level technology transfer has not actually taken place due to the following reasons: IJV parents are reluctant to engage in technology transfer, there is limited support from local government and local suppliers exhibit limited improvement in their innovation capability. The vertical linkage creation and low-medium technology transfer contributes to incremental product upgrading of the local suppliers, rather than their process upgrading and insertion into the global value chain (GVC).Research limitations/implications– This research looked at technology interactions between IJVs and local tier-1 suppliers (not tier 2 and tier 3) in Pakistan’s automotive industry. This paper’ illustrative case indicates what is required for local suppliers in developing economies to make breakthrough upgrades of their products and processes through their vertical linkages with foreign-owned indigenous firms.Originality/value– Unlike prior research, the authors investigate the role of inter-organizational linkages and the extent of technology transfer, and how these affect local suppliers’ product/process upgrading in the local value chain. Highlighting the illusion of upgrading in the GVC, this paper reveals the difficulties involved in upgrading suppliers’ positions (e.g. insertion and functional upgrading in the GVC) through their vertical linkages with foreign multinational enterprises in developing economies. The illusion of upgrading sheds a rather disappointing light on the position of developing country suppliervis-à-vistheir powerful international partners.

Determinants of Entry Mode Choice of MNCs into Emerging Markets:
 Some Evidence from South Africa and Egypt

It is now stylized that the importance of FDI for developing countries and emerging markets arise from the impact of the presence of multinational corporations (MNCs) in the host country on the productivity of the local firms, by way of technology diffusion and competition. There is also general agreement about the fact that the extent of technology transfer by a MNC to a developing country affiliate depends on the extent of its control on the local affiliate and that, in turn, the extent of this control depends on the mode of entry of the MNC into the host country. However, the existing literature is based on the experience of developed countries and does not make any contributions to the development economic literature. This paper addresses this lacuna using unique firm level data from South Africa and Egypt. Our results indicate that the determinants of entry mode choice not only differ between developed and developing countries, but also among developing countries. They also bring into question the reality about the role of MNCs in fostering productivity growth in developing countries.