International Technology Transfer to Local Suppliers by Volvo Trucks in India

Inge Ivarsson and Claes Göran Alvstam

Tijdschrift voor Economische en Sociale Geografie, 2004, vol. 95, issue 1, 27-43

Abstract: 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.

Date: 2004
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