Technology Diffusion through Production Process and the Innovative Capacity of Local Suppliers

Abd Rahim Jaguli, Marlin Marissa Malek, Mohd Rizal Palil

Abstract


ABSTRACT

This study goes beyond the existing research in the area of Foreign Direct Investment (FDI) spillovers by opening the black box of Multinational Corporations’ (MNC) technology and knowledge spillovers in Malaysia. The main objective of this study was to add to limited evidence related to how and in what ways technology and knowledge are diffused. Specifically, it attempts to contribute to the FDI spillover literature by exploring the channels through which technology and knowledge could be transferred to the host country. In doing so, the authors had employed an in-depth case study method in order to generate a deeper understanding of the significance of the assistance provided by MNCs and that this method would prove an effective strategy in generating a large volume of very meaningful data. The study has identified that technology is diffused from MNCs to local suppliers through the production process, technical consultation and production facilities. Local suppliers enhance their innovative capacity through these linkages. The findings not only provide benefit to the academic circle but also to local businesses, especially small and medium industries, as well as policy makers. The managerial and policy implications derived from the findings are relevant, not only to Malaysia, but also to other developing countries, particularly Malaysia’s neighbouring countries.

Keywords: FDI spillovers; backward linkages; technology and knowledge transfer; Malaysia; MNC.

ABSTRAK

Penyelidikan ini melampaui kajian sedia ada dalam bidang limpahan Pelaburan Langsung Asing (PLI) dengan membuka kotak hitam kajian mengenai limpahan teknologi dan pengetahuan Syarikat Multinasional di Malaysia.Secara spesifiknya, ia bertujuan untuk menyumbang kepada penyelidikan limpahan PLI dengan mengkaji mengenai saluran-saluran di mana teknologi dan pengetahuan boleh dipindahkan kepada Negara hos. Dengan berbuat demikian, penulis-penulis telah menggunakan metod kajian kes secara terperinci untuk memahmi secara mendalam signifikannya bantuan yang telah diberikan oleh syarikat multinasional dan metod tersebut telah terbukti merupakan satu strategi efektif untuk menjana sejumlah besar data yang bermakna. Kajian ini telah mengenal pasti bahawa teknologi dipindahkan dari Syarikat Multinasional kepada pembekal tempatan melalui proses pengeluaran, perundingan teknikal dan fasiliti pengeluaran. Pembekal tempatan telah meningkatkan kapasiti inovatif menerusi hubungan ini. Dapatan kajian ini bukan sahaja bermanfaat kepada golongan akademik tetapi juga kepada perniagaan tempatan, terutamanya kepada industry kecil dan sederhana, juga kepada pembuat dasar. Implikasi kepada pengurusan dan dasar yang diperolehi dari dapatan kajian adalah relevan bukan sahaja kepada Malaysia tetapi juga kepada negara sedang membangun lain, terutamanya negara-negara jiran Malaysia.

Kata kunci: Limpahan pelaburan langsung Asing (PLA); hubungan menegak; pemindahan teknologi dan pengetahuan; Malaysia; firma multinasional


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