Search

Our data from local suppliers to AB Volvo's truck and bus-plants in Brazil, China, India and Mexico show that foreign TNCs contribute to technology-learning and improved adaptive technological capabilities, which help suppliers to expand businesses with domestic and international OEM-customers in many industries and markets. This support the evolutionary perspective that technology transfers from industrialised to developing economies are based on local inter-firm linkages arising from regular manufacturing activities of foreign TNCs. A policy lesson is that business-linkages with foreign TNCs with a low-volume demand for high-quality products can result in technology-upgrading among small local suppliers who make necessary learning-investments. [ABSTRACT FROM AUTHOR]

This paper present a case study of international technology transfer, where foreign transnational companies (TNCs) in developing countries provide their local suppliers with technological assistance as part of their on-going business relationships. The analysis is set against a background of changing corporate strategies, where TNCs increasingly use ‘follow sourcing’, i.e. international suppliers set up operations close to their main established customers worldwide, leading to a situation where smaller indigenous suppliers, especially in developing countries, face difficulties in establishing business relationships with foreign TNCs that can lead to increased technological capabilities. We use unique firm-level data collected at Volvo Trucks’ assembly plant in India and show that domestic suppliers can improve their technological capability through a transfer of both product and production technology. Our findings complement the existing empirical litterature by showing that local technology transfer can arise from new green-field investments by TNCs focused on more simple assembly operations. [ABSTRACT FROM AUTHOR]