Determinants of Knowledge Transfer from Multinational Corporations to Local Firms: The Case of Turkish Automotive Industry
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Transfer of advanced technological knowledge from foreign direct investments (FDIs) is considered as an important mode of “learning” and “technological upgrading” for developing countries which are generally associated with limited capital accumulation, low level of industrialization and technological capability and insufficient human capital to upgrade their national technological capabilities (Blomstrom and Kokko, 1998, Gorg and Greenaway, 2004). It is generally assumed that multinational corporations, as the major drivers of foreign capital flow, hold the advantage of massive capital accumulation, operating in diversity of international markets, exploiting various local sources of knowledge, and able to make large inhouse investments into knowledge generation. Hence, they are considered as the source of advanced technological knowledge, and it is believed that their “existence” in the host economies and “business linkages” with the local actors would enable the flow of advanced knowledge into local actors in an autonomous way (Kokko, 1992). Thus, the foreign direct investment policies generally tend to concentrate on attracting “quantitatively” more foreign investments, and governments of developing countries are encouraged by international policy institutions to eliminate the domestic market protection barriers through liberalization policies (Narula and Portelli, 2004). However, the existence of FDI in the host country does not automatically generate any positive impact to the host economy (Kokko, 1996; Blomstrom and Kokko, 1998). Respectively, quantitative increase in the FDI inflow does not guarantee the transfer of technology, knowledge, and innovative capabilities from FDI to local firms. Not all multinational firms and their foreign affiliates are equally able and enthusiastic to share knowledge. Besides, not all FDI activities are equally knowledge-intensive, and create equal potentials for interaction with local actors for the exchange of technological knowledge. It should taken into consideration that there is a heterogeneity among the corporate characteristics (organizational structure, corporate culture and strategy, level of autonomy etc.) of MNC’s (Blomström and Sjöholm 1999, Rodriguez-Clare 1996, Gupta and Govindarajan 2000), as well as among the subsidiaries of MNC’s that creates heterogeneous results in their interactions, strategies, activities and spillover effects in the host-economies (Bell and Marin 2004, Birkinshaw and Hood 1998). On the other side of the knowledge transfer, the “knowledge absorption capacities” of local firms are not homogenous either. The capability of local firms to evaluate the value of their partner’s knowledge, to establish knowledge transfer channels, to absorb external knowledge, and finally to assimilate the technology and knowledge in the internal structure of the organization also show significant diversity due to the heterogeneity among the characteristics and capabilities of local firms (Cohen and Levinthal 1990, Portelli and Narula 2004). The type of relationship, the level of trust between collaborating partners, and duration of relationship also have strong influences on the level of knowledge transfer (Aitken Harrison 1991, Gorg and Ruane 1998, Ghoshal and Bartlett, 1988). Table 1 below presents a literature review about the determinants of knowledge transfer from MNCs to local firms.