Abstract
Technology transfers are important channels for firms in developing countries to get access to new technology and initiate innovation. This article examines the geographical pattern of technology transfers in the form of buyer-provided training in domestic and international production networks. Our unique buyer-supplier network data in four countries in Southeast Asia allow us to directly observe the buyer-supplier relationship as well as the existence of inter-firm provision of training for product/process innovation in order to investigate the geographical structure of knowledge acquisition, dissemination, and aggregation among local and non-local firms. The empirical analysis finds the following: (1) the probability of having training provided by the main buyer presents a U-shaped quadratic pattern with respect to the geographical distance between the respondent firms and the main buyers. The geographical proximity to the main buyer seems to be particularly important for local firms. (2) The training provision is likely for both local and non-local firms when the main buyer is a multinational located in the same country. (3) The probability of having training from the main buyer is high when the main buyer conducts R&D. (4) Both local and non-local firms that have training provided by their main buyers are likely to provide training to their main suppliers. (5) In the case of non-local firms, product innovation with production partners is more likely when they have upstream/downstream training. However, such links seem to be weaker in the case of local firms.
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Notes
Gerschenberg (1987) claims that managerial knowledge rarely flows from multinationals to domestic firms in Kenya. Gorg and Strobl (2005) find that enterprise owners who used to work for multinationals move to more productive firms than those who worked only for domestic firms by using a survey from Ghana. Markusen and Trofimenko (2009) show that foreign experts can transfer the knowledge to domestic workers in Colombia. Balsvik (2011) presents that workers with MNE experience make a more sizable contribution to the productivity of their plants than workers without MNE experience in the case of the Norwegian manufacturing sector. Poole (2013) documents wage spillovers within a firm through hiring well-trained workers from multinationals located in Brazil, but the extent of wage spillovers is limited to higher-skilled domestic workers, not lower-skilled workers. Stoyanov and Zubanov (2012) find that Danish firms hiring workers from more productive firms can experience productivity gains, and these gains increase with the skill level of new workers.
As Antràs and Rossi-Hansberg (2009) summarize, Jones and Kierzkowski (1990) provide a theoretical framework on observed fragmentation of production, explaining a tradeoff between gains from fragmentation, when the economic advantages of cross-border production are utilized, and the costs of disintegration from cross-border production.
This finding on the capital relationship between buyers and suppliers seems to be different from the implication of Atalay et al. (2014), which emphasized the importance of intangible inputs. They concluded that the prime motivation for owning multi-plants is to make more efficient transfers of knowledge of production and information on markets.
Our findings are partially supported by qualitative case studies on how buyer-supplier trade relationships solve the problem associated with transfers of tacit knowledge, particularly through buyers’ provision of technical assistance to their suppliers. An example is found in the transport equipment industry including automobiles and motorcycles in Vietnam. The Vietnam Manufacturing and Export Processing Co., Ltd. (hereafter VMEP), a motorcycle manufacturer, occasionally assigns technical officers to provide technical assistance for its suppliers. In its close collaborative relationship with Chiu Yi Vietnam (hereafter CYV), VMEP usually appoints technical staff in order to enable CYV to enhance product quality as well as support the development of new products and designs. Meanwhile, CYV appoints technical staff to examine process errors on the spot or take part in meetings about quality enhancement as well as submit a proposal to VMEP on improving technology and product styles (Truong 2010). A number of case studies have also revealed that the transportation equipment sector is dominated by MNE assemblers who provide their suppliers with technical assistance in return for high quality control on the supplier side. We can say that being a part of MNEs’ production network is just like attending a “training school” for its suppliers (Intarakumnerd 2010).
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Acknowledgments
The authors especially thank Yutaka Arimoto, Momoko Kawakami, Keiko Ito, Yoichi Sugita, Mari Tanaka, Willem Thorbecke, Kazunari Tsukada, and Shujiro Urata for their insightful inputs and comments and the seminar participants at IDE-JETRO and The East Asian Economic Association (EAEA), 2014, for helpful comments. This project could not have been carried out without cooperation from the Indonesian Institute of Sciences (LIPI) of Indonesia, the Philippine Institute for Development Studies (PIDS), the Sirindhorn International Institute of Technology (SIIT), Thammasat University of Thailand, the Institute for Industry Policy and Strategy (IPSI), Ministry of Industry and Trade of Vietnam, Bangkok Research Center of IDE-JETRO, and Economic Research Institute for ASEAN and East Asia (ERIA), who provided financial support for our questionnaire survey. Support for Machikita’s and Ueki’s research from JSPS (nos. 21320212 and 25380559) is also gratefully acknowledged. We are solely responsible for any errors that may remain.
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Kimura, F., Machikita, T. & Ueki, Y. Technology transfer in ASEAN countries: some evidence from buyer-provided training network data. Econ Change Restruct 49, 195–219 (2016). https://doi.org/10.1007/s10644-015-9163-9
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DOI: https://doi.org/10.1007/s10644-015-9163-9