Multinational corporations Essay
Since the mid-1960’s, the dissemination of technology via multinational corporations (MNCs) has accelerated. As highlighted by Peter Dicken (2003, pp. 85), technology, “an enabling or facilitating agent”, is “one of the most important processes underlying the globalization of economic activity” which is now being transferred by MNCs through the advice and assistance to local firms.
Indeed, due to the proprietary advantage of MNCs, that is to say large and specialized firms which can attract global markets to finance the necessary R&D, and their market power, consequently MNCs have naturally be considered as a very important agent of technology transfer” (UNCTAD, 1996). Therefore, some questions can be raise. What role do MNCs play in the process of technological development in host countries? To what extent have MNCs been responsible for a more widespread international diffusion of technological expertise?
In order to understand those questions, this essay will first deal with some aspects linked with technology in order to better understand the complexity of technological expertise, then through two empirical studies of technological diffusion, factors allowing MNCs to generate a greater diffusion of products and technologies will be analysed, and finally weaknesses of MNCs in the diffusion of technological expertise and some solutions will
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Despite some difficulties to define it, technology transfer means “nothing less than the transfer of the capacity to understand and develop the introducer technology” (Komoda, 1986, p.407) within or between firms across national borders. So the transfer of a technology is supposed to be complete and achieved when all the process is entirely absorbed without any assistance coming from outside and when, above all, it can improve, extend and develop the technology originally transferred (UNCTAD, 1996). A major distinction in the nature of technology has to be underlined, which, as suggested by Peter Dicken (2003, pp. 115-116), “is important to understanding the role of space and place in technological diffusion”.
The transfer and the diffusion of the technology made through firms will differ according to if it is a codifiable or explicit knowledge, such as documents, blueprints, software or hardware, which can be articulated formally, or a tacit knowledge, which is that which exists within a human being and is gained mainly through experience. This is “the deeply personalized knowledge possessed by individuals that is virtually impossible to make explicit and to communicate to others through formal mechanisms. ” (P. Dicken, 2003).