Strategic Management: Formulation and Implementation

Technology And Innovatory Capacity: A Host Country Perspective

One of the main advantages of MNEs is their ability to produce, acquire, master the understanding of and organize the use of technological assets across national boundaries. Large industrialized firms have been the main producers, organizers and users of technological capacity. The globalization of markets and production and the tendency for technologies to become more generic and systemic have tended to strengthen the advantages of large MNEs.

Appropriability Of Technology

Appropriability is the ability of the innovating firm to protect its technology from competitors and to obtain economic benefits from that technology. There are several choices open to countries that wish to take advantages of the world's stock of physical and human capital. A country can rely entirely on other countries to produce technology (e.g., Kuwait, Jamaica) or it may attempt to be completely selfsufficient in the technology it needs (e.g., in the past, some larger socialist countries). In between these extremes are a host of possible scenarios of knowledge "dependence" or "interdependence."

In choosing between different sources of foreignowned technology, the extent to which the technology is appropriate, or can be adopted to the particular needs of the host country, may be and often is, of critical of importance. This is because a production or marketing technology that its is suitable to one country might not to be so for another.

The next problem is the willingness of MNEs to adopt their technologies to host country. Research so far conducted suggests that there are four main determinants of this willingness to adopt technology by MNEs to different countryspecific circumstances: size and characteristics of the markets served, differences in factor costs, differences in the availability of factor inputs and materials, differences in organizational cultures and the form of interfirm relationships. Such adoptions may either take the from of modifications of the methods by which particular products are produced or the types of products produced.