Strategic Management: Formulation and Implementation

Attitudes And Strategies Of Host Governments

Host countries may differ considerably in their attitudes towards the foreign ownership of technology and technological capacity. For example, in cases Korea and Japan not only has government policy towards outward direct investment been geared to sustaining the domestic innovatory capacity of the home country, but it has deliberately limited inward investment until indigenous technological capability is sufficiently strong for such investment to interact with it an mutually beneficial way.

Germany and Singapore have followed a different strategy and they believe that inward investment is the quickest (and often the cheapest) way of upgrading local technological capability, and that the opportunity cost of such investment is more covered by the increases in social productivity it brings about.

Exhibit 21 identifies some actions which a government might pursues towards inward technology transfer, owned or controlled by foreign MNEs, and the conditions under which these are most likely to be successful.