Benefits Of Technology Contribution To Developing Countries

In such fast growing economies, multinational companies are relying seriously on technology to keep up their competitive position in the global system. To take action, multinational companies constantly increase into new marketplaces and hence their success is partially dependant on their ability to transfer technology to local companies (Chen (1996), Chung (2001)). Transfer of technology is a most important strategy initiated by the multinational companies during their international enlargement. Technology transfer is thought as "the transmission of know-how to match local conditions, with effective absorption and diffusion both within and across countries (CHung (2001) and Tihanyi & Roath (2002). Copy of technology is not as simple as it looks it involves a series of complex procedures beginning with the multinational companies capacity for teaching, the neighborhood companies capacity of learning and the complex integration between your two companies (Griffith, Kiessling and Dabic, 2005). Technology offers companies the competitive border to strive and contend in the global world. It is integrated with every value adding activity of the business and helps in achieving these activities (Porter, 1980). Technology helps in improving and retaining quality levels and competitive edge of the merchandise. It also helps in minimizing the productions cost and increase developing productivity by improving efficiency (Gisselquist & Grether, 2000).

Every country (expanding and developed) spends large amount of funds to draw in foreign opportunities. This investment can be in terms of overseas direct purchases in stocks of local companies or in terms of buying the country's properties real property or opening up a manufacturing plant in the united states. The reasons known for such patterns by the government authorities of growing and developed country is to strengthen their current economic climate and technology elegance and upgradation. Whenever a multinational company is functioning in overseas (developing) country, it happens to earns new technology and ways of working to the neighborhood country. Thus aiding the country to up grade its scientific know-how. In such a paper, the author will first identify the importance of technology contribution by multinationals and later evaluates the factors that will determine the set up transferred technology provides benefits or is a downside to the web host country.

The role of multinational companies as a realtor of technology transfer for economic development of less developed countries is potential and very important (Bruce Peters, 1979).


Keeping away few instances which may have taken place and the items noted against the multinational companies in less producing countries. We cannot ignore the reality these multinational companies have played out a vital role in technological and overall development of growing countries. Starting from copy of technology to having new ways of controlling business to enhancing productivity to making local business competitive in comparison to the globe. The contribution of the multinational companies in less developed countries is noteworthy (Aswathappa, 2008). Multinational companies and growing countries have different goals, hence they must try to get together and find shared goals and benefits. This could be in terms of resource identification, technology selection and progression. It really is known that the entire world is dependent on one another for few or even more things. It is the growing countries that are reliant on multinational companies from developed countries for assist in term of technological development and more robust economies. Likewise, the multinational companies are dependent on these producing countries for cheap labor and land. Their goal is common and hence by working along can realize benefits for each other.

Against MNCS

There are numerous cases and instances which show that the multinationals technology contribution to growing countries is barely suited. Multinational companies develop technology that are highly capital rigorous whereas the solutions needed by the growing countries are labor intensive. Thus this makes the technology contribution as less suitable, also multinational companies demand heavily in the types of fees, obligations and royalties for the utilization of these technology. Thus making the technology very costly for the producing countries. On several events it has been noted that that multinational companies or international companies functioning in growing countries are dumping systems by using outdated technology with the help of turnkey projects. Additionally it is observed that multinational companies try to make local companies dependent on their technology and know-how and therefore making income by contributing outdated technologies. For example: Indian administration did its better to attract foreign companies and investment with a wish these multinational companies would help reach its goal of experiencing best technology around the globe and strong export hub. This goal of India is not yet been came to the realization with the exports falling and the global financial meltdown still showing some of its impact in India. Also, other expanding countries have been disappointed at many occasions. Today the word green is associated with the global warming; many companies have removed green meaning they took the initiative to utilize eco - friendly methods to minimize their impact on the environments. Growing countries drawn multinational companies with the expectation of establishing Greenfield assignments which would in turn help to boost their making capacity. The goal is yet to be performed. government of expanding countries attract overseas companies in order to bring new systems to country but these international companies in turn either acquire local companies or combine with them, thus keeping the united states away from new technology and processing ability. Many less developed countries have finally kept environment on the first priority. Countries are actually becoming more concerned about the impact that multinationals create on the surroundings credited to certain technologies that they use (Aswathappa, 2008).


It is also very important to note the factors that will determine if the technology moved will be of great benefit to the growing country or not. Griffith et al. , (2006) uses an environment - strategy - performance platform to recognize the role of market (i. e. competitive depth and market dynamics) and social environmental (nationwide cultural distance and organizational cultural distance) factors on international technology transfer to developing countries. During a survey conducted to find out the direct attempts of market and ethnic environmental factors on copy of technology with 131 professionals working in a subsidiary of multinational company. It was found that market dynamism factors were more influential market environmental factor than competitive depth. Whereas national cultural distance was less influential social environment factor than organizational cultural distance. The report also highlighted a very important and pivotal relationship between copy of technology and subsidiary performance (Griffith et al. , 2006)


Multinational companies are businesses that perform operations across earth. They are the most effective players in the world of international business they are often priced on several grounds like taking good thing about poor countries, their interests override the pursuits of developing nations and they have a tendency to bribe the less developed country federal government to make regulations and regulations beneficial to them. It is widely known that every coin have two attributes, there are positives and then there are negatives, there may be opportunity and then there exists risk. multinational companies are very important in conditions of technology contribution but then there are hazards of outdated technology, technology dumping, effect on environment etc. thus expanding countrys administration should list few factors that would help them to find out if the technology contribution by multinationals is profit to the web host country or not.

A research conducted by Gibson and Smilor shows that there are four variables i. e. communication interactivity, cultural and geographical distance, technology equivocally and personal drive play very important role in technology copy within and between companies (Gibson and Smilor, 1991). In another research conducted by Rebentisch and Ferretti (1995), they discovered that four categories, Copy Scope, Copy Method, Knowledge Architecture, and Organizational Adaptive Potential, describe important elements of the copy process. Transfer Range describes the amount of embodied information being moved. Transfer Method explains the strategies used to copy the technology. Knowledge Architecture describes the structure and the interdependencies between your firm's knowledge assets. Organizational Adaptive Ability describes an organization's capability to change its knowledge structures as time passes.

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