Multinational Corporations and Technology Transfer: Some Problems and Suggestions

Abstract

We are here concerned with one aspect only of the foreign company — its role as an exporter of technology, not with an assessment of its total impact. The foreign company exports technology to other countries, including developing countries, either in embodied or disembodied (separate) form. Embodied export of technology is involved if the foreign company sets up a subsidiary (wholly or jointly owned) or supplies materials, equipment, etc., embodying its own technology. In this case, the embodied transfer of technology consists both in the standard of management and production technique employed by the foreign company in production, and the spread effects by training and force of example. Disembodied forms include licensing, transfer of patented or non-patented knowledge, and management contracts, consultants’ services, etc. The embodied technology of the foreign company includes, also importantly, techniques of marketing and marketing channels. Embodied and disembodied forms of transfer of technology can be, and often are, combined. Transfer of embodied technology is certainly more important in the overall activities of the foreign company, but because this part is invisible, it is often underrated.

Paper presented to OECD Conference on ‘The Transfer of Technology’, Istanbul, 5–9 Oct 1970. In preparing this paper, I have drawn upon the presentation by Mr E. P. Hawthorne in his paper on ‘The Transfer of Technology’ as well as on research by Mr Javed Ansari, graduate student at the University of Sussex. I have also benefited from discussions on private overseas investment at a recent conference in Cambridge on employment generation in developing countries, organized by the Cambridge Overseas Studies Committee.