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In this study we analyze the role of colocation between research and development (R&D) and manufacturing for global technology development by multinational enterprises (MNEs). The extant literature suggests that the main strategic role of colocated R&D units is to locally adapt existing products and processes. However, data from 146 foreign R&D units of Sweden's 17 largest manufacturing MNEs in 2013 show that they instead mainly develop new technology, not only for the local and regional markets, but to a large extent for the global market. A likely explanation is that colocation positively contributes to joint problem-solving and transfer of tacit knowledge between production and R&D personnel, all of which is necessary in new product development, especially in industries characterized by complex products and systems and rapid technological change. A theoretical implication is that depending on industry characteristics, internal cross-functional linkages between R&D and manufacturing can be more critical than external supply- and demand-side factors when it comes to influence where R&D units are located globally. [ABSTRACT FROM AUTHOR]

In this study, we use detailed firm-level data from the heavy truck and bus plants of AB Volvo and its 389 local component suppliers in Brazil, China, India, and Mexico to investigate the extent to which domestic suppliers are able to compete with international follow-source suppliers, and improve their operations through technological assistance from their transnational corporation customer. Although follow-source suppliers have captured large shares of local purchases, our findings show that technology transfers from industrialized to developing economies are to a large extent based on local interfirm linkages arising from regular production activities. An instance of this is Volvo, which provides its domestic suppliers with technological assistance, enhancing them to improve their operations. Our findings also show that long-term relationships are important in interfirm learning, although it was demonstrated that more short-term relationships can also generate benefits for domestic suppliers. Key words--international technology transfer, TNCs, local business linkages, domestic suppliers, truck and bus industry, developing countries

Research indicates that local businesses in Sweden benefit from multinational corporations with regard to technology transfer. Studies were performed on 287 majority-owned foreign affiliates, which determined their positive influence on the access of local businesses to technological innovation.