Does Technology Transfer Help Small and Medium Companies? Empirical Evidence from Korea

Dae-Hwan Kim, Matarr O. Sambou and Moo-Sup Jung
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Dae-Hwan Kim: Department of Economics, Dong-A University, Busan 602-760, Korea
Matarr O. Sambou: Department of Economics, University of Calgary, Calgary, AB T2N 1N4, Canada
Moo-Sup Jung: Department of International Trade, Dong-A University, Busan 602-760, Korea

Sustainability, 2016, vol. 8, issue 11, 1-13

Abstract: We challenge the view that technology transfer from big companies to small and medium (SM) size companies helps SM companies to prosper. With a large dataset of SM companies in Korea, we utilize the stochastic production frontier (SPF) model to examine the productivity of inputs and the generalized linear model (GLM) to compare business performance between two groups of SM companies: SM companies that receive technology transfer and those that do not receive technology transfer from big companies. The empirical results demonstrate that the transfer of technology from big companies to SM companies help SM companies to enjoy productivity of capital. Nonetheless, SM companies receiving technology transfer were found to underperform in terms of labor productivity and profit margin compared to their counterparts. We further investigate the reasons why SM companies receiving technology transfer from big companies underperform relative to their counterparts, and our findings shows that the former do not export much of their product and face more difficulties such as lower price for their products imposed by big companies than the latter. By identifying the negative rather than the conventionally assumed positive effect of technology transfer, this paper contributes to the literature on the relationship between technology transfer and SM companies’ prosperity in the case of Korea. Our findings have important implications for how SM companies should strategize and rethink about the clauses embedded in the transfer of technology that they receive from big companies because technology transfer plays as a barrier to their prosperity.

Keywords: technology transfer; small and medium (SM) companies; productivity; globalization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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