International Technology Transfer to Local Suppliers by Volvo Trucks in India

This paper present a case study of international technology transfer, where foreign transnational companies (TNCs) in developing countries provide their local suppliers with technological assistance as part of their on-going business relationships. The analysis is set against a background of changing corporate strategies, where TNCs increasingly use 'follow sourcing', i.e. international suppliers set up operations close to their main established customers worldwide, leading to a situation where smaller indigenous suppliers, especially in developing countries, face difficulties in establishing business relationships with foreign TNCs that can lead to increased technological capabilities. We use unique firm-level data collected at Volvo Trucks' assembly plant in India and show that domestic suppliers can improve their technological capability through a transfer of both product and production technology. Our findings complement the existing empirical litterature by showing that local technology transfer can arise from new green-field investments by TNCs focused on more simple assembly operations. Copyright (c) 2004 by the Royal Dutch Geographical Society KNAG.