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INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY

Year 2011, Volume: 24 Issue: 4, 945 - 957, 16.12.2011

Necibe Aydan Sat

Abstract

In this study, innovation and technology transfer strategies of foreign firms in Turkey and the impact of vertical and horizontal linkages, labour turnover and technology spillover on these activities are analyzed by adopting a grounded theory approach, which allows a theory to emerge from field work. It is found that the foreign firms are more innovative than their local partners, and generally transfer technology from their parent companies in home country not from local market. Additionally, findings of this study reiterate the importance of tacitness of knowledge, and confirm that technology cannot easily be transferred through passive mechanisms.

Key Words: Foreign direct investment, Multinational Corporation, innovation, technology transfer, İstanbul,Turkey

 

 

Keywords

Foreign direct investment Multinational Corporation innovation technology transfer İstanbul Turkey

References

  • Giroud, A. and Scott-Kennel, J., “Foreign-local linkages in international business: A review and extension of the literature”, in Proceedings of the 48th Annual Meeting of the Academy of International Business, Guanghua School of Management, Peking University, (2006).
  • Caves, R., “Multinational Firms, Competition, And Productivity In Host-Country Markets”, Economica, 41: 176–193. (1974).
  • Kokko, A., “Technology Market Characteristics and Spillovers”, Journal of Development Economics, 43: 279–293, (1994).
  • Oulton, N., Investment, Capital and Foreign Ownership in UK Manufacturing, Discussion Paper, No. 141, National Institute of Economic and Social Research (NIESR), (1998).
  • Blömström, M., Sjöholm, F., “Technology Transfer and Spillovers: Does Local Participation with Multinationals Matter?” European Economic Review, 43: 915–923, (1999).
  • Xu, B., “Multinational Enterprises, Technology Diffusion, and Host Country Productivity Growth”, Journal of Development Economics, 62: 477–493, (2000).
  • Baldwin, R., Braconier, H., Forslid, R., “Multinationals, Endogeneous Growth and Technological Spillovers: Theory and Evidence”, CEPR Discussion Paper, No. 2155, London, (1999).
  • Girma, S., and Wakelin, K., “Regional Underdevelopment: Is FDI the Solution? A Semi-Parametric Analysis”, GEP Research Paper No. 2001/11, University Of Nottingham, UK, (2001).
  • Branstetter, L., “Is Foreign Direct Investment a Channel of Knowledge Spillovers? Evidence From Japan’s FDI in The United States”, NBER Working Paper No. 8015, (2001).
  • Haddad, M., “Are There Positive Spillovers from Direct Foreign Investment? Evidence From Panel Data For Morocco”, Journal of Development Economics, 42: 51–74, (1993).
  • Aitken, B. and Harrison, A. “Do Domestic Firms Benefit From Foreign Direct Investment? Evidence From Venezuela”, American Economic Review , 89: 605–618, (1999).
  • Lichtenberg, F. and Van Pottelsberghe De La Potterie, B., International R&D Spillovers: A Re-Examination, NBER Working Paper No. 5688, (1996).
  • Hansen, H. and Rand, J., “On the Causal Links Between FDI and Growth in Developing Countries”, The World Economy, 29(1): 21-41, (2006).
  • Yılmaz, B. and Barbaros, A., “Development and Determinants of Foreign Direct Investment in Turkey: A Comparison with Ireland and Spain”, Elites and EU Enlargement, Second International Conference, Bremen/Germany, (2005).
  • Erdilek, A., Direct Foreign Investment in Turkish Manufacturing, J.C.B. Mohr, Tübingen, (1982).
  • Erdilek, A., “Turkey’s New Open-Door Policy of Direct Foreign Investment: A Critical Analysis of Problems and Prospects”, METU Studies in Development, 13: 171–191, (1986).
  • Lenger, A., and Taymaz, E., “To Innovate or to Transfer? A Study on Spillovers and Foreign Firms in Turkey”, Journal of Evolutionary Economics, 16: 137–153 (2006).
  • Liu, X. and Wang, C., “Does Foreign Direct Investment Facilitate Technological Progress? Evidence from Chinese Industries”, Research Policy, 32: 945–953, (2003).
  • Hymer, S.H., The International Operations of National Firms: A Study of Direct Foreign Investment, MIT Press, Cambridge, MA, (1976).
  • Buckley, P. J. and Casson, M. C., The Future of the Multinational Enterprise, Macmillan Publications, London, (1976).
  • Dunning, J. H., Multinational Enterprises and the Global Economy, Addison-Wesley Publication, Wokingham, (1994).
  • Caves, R. E., Multinational Enterprises and Economic Analysis, Cambridge University Press, Cambridge Second Edition, (1996).
  • Veugelers, R. and Cassiman, B., “Foreign Subsidiaries as a Channel of International Technology Diffusion: Some Direct Firm Level Evidence From Belgium”, European Economic Review, 48: 455 – 476, (2004).
  • Ethier, W.J., “The Multinational Firms”, Quarterly Journal of Economics, 102: 805–833, (1986).
  • Horstmann, I.J., and Markusen, J.R., “Endogenous Market Structures in International Trade”, Journal of International Economics, 32: 109–129, (1992).
  • Brainard, L.S., “A Simple Theory of Multinational Corporations and Trade With a Trade-Off Between Proximity and Concentration”, NBER Working 4269, (1993).
  • Markusen, J.R., Foreign Direct Investment and Trade Centre for International Economics Studies, Policy Discussion, 0019, University of Adelaide, Australia, (2000).
  • Markusen, J.R. and Venables, A.J., “Foreign Direct Investment as a Catalyst for Industrial Development”, European Economic Review, 43: 335–356, (1999).
  • Barrell, R., Pain, N., “Domestic Institutions, Agglomerations And Foreign Direct Investment in Europe”, European Economic Review, 4–6: 925–934, (1999).
  • Braconier, H., Ekholm, K., Midelfart Knarvik, K-H., “Does FDI Work As A Channel For R& D Spillovers? Evidence Based On Swedish Data”, The CEPR/IMOP Workshop, Greece,(1999).
  • Grossman, G., and Helpman, E., Innovation and Growth in the Global Economy, MIT Press, Cambridge, MA., (1995).
  • Rodriguez-Clare, A., “Multinationals, Linkages, and Economic Development”, American Economic Review, 86(4): 852-873, (1996).
  • Lıu, X. and Buck, T., “Innovation Performance and Channels for International Technology Spillovers: Evidence from Chinese High-Tech Industries” Research Policy, 36: 355-366, (2007).
  • Saggi, K., Trade, Foreign Direct Investment, and International Technology Transfer: A Survey, World Bank Research Observer, 17: 191-235, (2002).
  • UNCTAD, “World Investment Report”, United Nation, New York, (2001).
  • Moran, T. H., Parental Supervision: The New Paradigm For Foreign Direct Investment And Development, Washington DC, Institute For International Economics, (2001).
  • Javorcik, B. S., Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages, World Bank Research Paper, Washington, (2003).
  • JBICI-Japan Bank For International Cooperation Institute, Foreign Direct Investment And Development: Where Do We Stand?, JBICI Research Paper, No:15, (2002).
  • Driffield, N., Munday, M. and Roberts, A., “Foreign Direct Investment, Transactional Linkages, and the Performance of the Domestic Sector”, International Journal of the Economics of Business, 9(3) : 335-351, (2002).
  • Chen, T.-J., Chen, H. and Ku, Y-H., “Foreign Direct Investment and Local Linkages”, Journal of International Business Studies, 35(4): 320-333, (2004).
  • Cowan, R., David, P.A. and Foray, D., “The Explicit Economics of Knowledge Codification and Tacitness”, Industrial and Corporate Change, 9(2): 211–253, (2000).
  • Hood, N., and Young, S., “US Investment in Scotland - Aspects of the Branch Factory Syndrome”, Scottish Journal of Political Economy, 23(3): 279-94, (1976).
  • Thwaıtes, A. T., “Technological Change, Mobile Plants and Regional Development”, Regional Studies, 12: 445–461, (1978).
  • Cantwell, J., “The Globalisation of Technology: What Remains of the Product Cycle Model”, Cambridge Journal of Economics, 19:155–174,(1995).
  • Howells, J., “Tacit Knowledge, Innovation and Technology Transfer”, Technology Analysis and Strategic Management, 8: 91–106, (1996).
  • Phelps, N., Mackinnon, D., Stone, I. and Braidford, P. Embedding the Multinationals? Institutions and the development of overseas manufacturing affiliates in Wales and North East England, Regional Studies, 37: 27-40, (2003).
  • Glaser, B. G., Strauss, A., The Discovery Of Grounded Theory: Strategies For Qualitative Research, Aldine Press, New York, (1967).
  • Strauss, A. and Corbin, J., Basics of Qualitative Research: Grounded Theory Procedures and Techniques (2nd Edition), Sage Publications, Thousand Oaks, Ca., (1998).
  • Partington, D., “Building Grounded Theories of Management Action”, British Journal of Management, 11(2): 91–102, (2000).
  • Xiao,J. Z., Dahya, J. and Lin, Z., “A Grounded Theory Exposition of the Role of the Supervisory Board in China”, British Journal Of Management, 15: 39–55, (2004).
  • Sat, N. A., Local Embeddedness of Transnational Corporations: Turkish Case, Unpublished Phd Thesis, METU, Ankara, (2005).
  • Phelps, N. A. and Fuller, C., “Multinationals, Intra-corporate Competition, and Regional Development”, Economic Geography, 76(3):224-243, (2000).
  • Dunning, J.H., International Production and the Multinational Enterprise, Allen and Unwin Pub., London, (1981).
  • Rasiah, R., “Flexible Production Systems and Local Machine Tool Subcontracting: Electronics Component Multinationals in Malaysia”, Cambridge Journal of Economics, 18: 279-98, (1994).
  • Wang, J.,Y. and Blömström, M., “Foreign Direct Investment And Technology Transfer”, European Economic Review, 36: 137-155, (1992).
  • Peck, F. and Stone, I., New Inward Investment and The Northern Region Labour Market Employment, Department Research Series No. 6, Department of Employment, Sheffield, (1992).
  • Rees, G. and Thomas, M., “Inward Investment, Labour Market Adjustment and Skills Development: Recent Experience in South Wales”, Local Economy, 9: 48 – 61, (1994).
  • Lundvall, B.-Å. and Johnson, B. “The Learning Economy”, Journal of Industry Studies, 1(2): 23-42, (1994).
  • Cooke, P. and Morgan, K. The Associational Economy, Oxford, Oxford University Press, (1998).
  • Padilla-Pe´Rez, R., “A Regional Approach to Study Technology Transfer Through Foreign Direct Investment: The Electronics Industry in Two Mexican Regions”, Research Policy, 37: 849-860 (2008).

Year 2011, Volume: 24 Issue: 4, 945 - 957, 16.12.2011

Necibe Aydan Sat

Abstract

References

  • Giroud, A. and Scott-Kennel, J., “Foreign-local linkages in international business: A review and extension of the literature”, in Proceedings of the 48th Annual Meeting of the Academy of International Business, Guanghua School of Management, Peking University, (2006).
  • Caves, R., “Multinational Firms, Competition, And Productivity In Host-Country Markets”, Economica, 41: 176–193. (1974).
  • Kokko, A., “Technology Market Characteristics and Spillovers”, Journal of Development Economics, 43: 279–293, (1994).
  • Oulton, N., Investment, Capital and Foreign Ownership in UK Manufacturing, Discussion Paper, No. 141, National Institute of Economic and Social Research (NIESR), (1998).
  • Blömström, M., Sjöholm, F., “Technology Transfer and Spillovers: Does Local Participation with Multinationals Matter?” European Economic Review, 43: 915–923, (1999).
  • Xu, B., “Multinational Enterprises, Technology Diffusion, and Host Country Productivity Growth”, Journal of Development Economics, 62: 477–493, (2000).
  • Baldwin, R., Braconier, H., Forslid, R., “Multinationals, Endogeneous Growth and Technological Spillovers: Theory and Evidence”, CEPR Discussion Paper, No. 2155, London, (1999).
  • Girma, S., and Wakelin, K., “Regional Underdevelopment: Is FDI the Solution? A Semi-Parametric Analysis”, GEP Research Paper No. 2001/11, University Of Nottingham, UK, (2001).
  • Branstetter, L., “Is Foreign Direct Investment a Channel of Knowledge Spillovers? Evidence From Japan’s FDI in The United States”, NBER Working Paper No. 8015, (2001).
  • Haddad, M., “Are There Positive Spillovers from Direct Foreign Investment? Evidence From Panel Data For Morocco”, Journal of Development Economics, 42: 51–74, (1993).
  • Aitken, B. and Harrison, A. “Do Domestic Firms Benefit From Foreign Direct Investment? Evidence From Venezuela”, American Economic Review , 89: 605–618, (1999).
  • Lichtenberg, F. and Van Pottelsberghe De La Potterie, B., International R&D Spillovers: A Re-Examination, NBER Working Paper No. 5688, (1996).
  • Hansen, H. and Rand, J., “On the Causal Links Between FDI and Growth in Developing Countries”, The World Economy, 29(1): 21-41, (2006).
  • Yılmaz, B. and Barbaros, A., “Development and Determinants of Foreign Direct Investment in Turkey: A Comparison with Ireland and Spain”, Elites and EU Enlargement, Second International Conference, Bremen/Germany, (2005).
  • Erdilek, A., Direct Foreign Investment in Turkish Manufacturing, J.C.B. Mohr, Tübingen, (1982).
  • Erdilek, A., “Turkey’s New Open-Door Policy of Direct Foreign Investment: A Critical Analysis of Problems and Prospects”, METU Studies in Development, 13: 171–191, (1986).
  • Lenger, A., and Taymaz, E., “To Innovate or to Transfer? A Study on Spillovers and Foreign Firms in Turkey”, Journal of Evolutionary Economics, 16: 137–153 (2006).
  • Liu, X. and Wang, C., “Does Foreign Direct Investment Facilitate Technological Progress? Evidence from Chinese Industries”, Research Policy, 32: 945–953, (2003).
  • Hymer, S.H., The International Operations of National Firms: A Study of Direct Foreign Investment, MIT Press, Cambridge, MA, (1976).
  • Buckley, P. J. and Casson, M. C., The Future of the Multinational Enterprise, Macmillan Publications, London, (1976).
  • Dunning, J. H., Multinational Enterprises and the Global Economy, Addison-Wesley Publication, Wokingham, (1994).
  • Caves, R. E., Multinational Enterprises and Economic Analysis, Cambridge University Press, Cambridge Second Edition, (1996).
  • Veugelers, R. and Cassiman, B., “Foreign Subsidiaries as a Channel of International Technology Diffusion: Some Direct Firm Level Evidence From Belgium”, European Economic Review, 48: 455 – 476, (2004).
  • Ethier, W.J., “The Multinational Firms”, Quarterly Journal of Economics, 102: 805–833, (1986).
  • Horstmann, I.J., and Markusen, J.R., “Endogenous Market Structures in International Trade”, Journal of International Economics, 32: 109–129, (1992).
  • Brainard, L.S., “A Simple Theory of Multinational Corporations and Trade With a Trade-Off Between Proximity and Concentration”, NBER Working 4269, (1993).
  • Markusen, J.R., Foreign Direct Investment and Trade Centre for International Economics Studies, Policy Discussion, 0019, University of Adelaide, Australia, (2000).
  • Markusen, J.R. and Venables, A.J., “Foreign Direct Investment as a Catalyst for Industrial Development”, European Economic Review, 43: 335–356, (1999).
  • Barrell, R., Pain, N., “Domestic Institutions, Agglomerations And Foreign Direct Investment in Europe”, European Economic Review, 4–6: 925–934, (1999).
  • Braconier, H., Ekholm, K., Midelfart Knarvik, K-H., “Does FDI Work As A Channel For R& D Spillovers? Evidence Based On Swedish Data”, The CEPR/IMOP Workshop, Greece,(1999).
  • Grossman, G., and Helpman, E., Innovation and Growth in the Global Economy, MIT Press, Cambridge, MA., (1995).
  • Rodriguez-Clare, A., “Multinationals, Linkages, and Economic Development”, American Economic Review, 86(4): 852-873, (1996).
  • Lıu, X. and Buck, T., “Innovation Performance and Channels for International Technology Spillovers: Evidence from Chinese High-Tech Industries” Research Policy, 36: 355-366, (2007).
  • Saggi, K., Trade, Foreign Direct Investment, and International Technology Transfer: A Survey, World Bank Research Observer, 17: 191-235, (2002).
  • UNCTAD, “World Investment Report”, United Nation, New York, (2001).
  • Moran, T. H., Parental Supervision: The New Paradigm For Foreign Direct Investment And Development, Washington DC, Institute For International Economics, (2001).
  • Javorcik, B. S., Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages, World Bank Research Paper, Washington, (2003).
  • JBICI-Japan Bank For International Cooperation Institute, Foreign Direct Investment And Development: Where Do We Stand?, JBICI Research Paper, No:15, (2002).
  • Driffield, N., Munday, M. and Roberts, A., “Foreign Direct Investment, Transactional Linkages, and the Performance of the Domestic Sector”, International Journal of the Economics of Business, 9(3) : 335-351, (2002).
  • Chen, T.-J., Chen, H. and Ku, Y-H., “Foreign Direct Investment and Local Linkages”, Journal of International Business Studies, 35(4): 320-333, (2004).
  • Cowan, R., David, P.A. and Foray, D., “The Explicit Economics of Knowledge Codification and Tacitness”, Industrial and Corporate Change, 9(2): 211–253, (2000).
  • Hood, N., and Young, S., “US Investment in Scotland - Aspects of the Branch Factory Syndrome”, Scottish Journal of Political Economy, 23(3): 279-94, (1976).
  • Thwaıtes, A. T., “Technological Change, Mobile Plants and Regional Development”, Regional Studies, 12: 445–461, (1978).
  • Cantwell, J., “The Globalisation of Technology: What Remains of the Product Cycle Model”, Cambridge Journal of Economics, 19:155–174,(1995).
  • Howells, J., “Tacit Knowledge, Innovation and Technology Transfer”, Technology Analysis and Strategic Management, 8: 91–106, (1996).
  • Phelps, N., Mackinnon, D., Stone, I. and Braidford, P. Embedding the Multinationals? Institutions and the development of overseas manufacturing affiliates in Wales and North East England, Regional Studies, 37: 27-40, (2003).
  • Glaser, B. G., Strauss, A., The Discovery Of Grounded Theory: Strategies For Qualitative Research, Aldine Press, New York, (1967).
  • Strauss, A. and Corbin, J., Basics of Qualitative Research: Grounded Theory Procedures and Techniques (2nd Edition), Sage Publications, Thousand Oaks, Ca., (1998).
  • Partington, D., “Building Grounded Theories of Management Action”, British Journal of Management, 11(2): 91–102, (2000).
  • Xiao,J. Z., Dahya, J. and Lin, Z., “A Grounded Theory Exposition of the Role of the Supervisory Board in China”, British Journal Of Management, 15: 39–55, (2004).
  • Sat, N. A., Local Embeddedness of Transnational Corporations: Turkish Case, Unpublished Phd Thesis, METU, Ankara, (2005).
  • Phelps, N. A. and Fuller, C., “Multinationals, Intra-corporate Competition, and Regional Development”, Economic Geography, 76(3):224-243, (2000).
  • Dunning, J.H., International Production and the Multinational Enterprise, Allen and Unwin Pub., London, (1981).
  • Rasiah, R., “Flexible Production Systems and Local Machine Tool Subcontracting: Electronics Component Multinationals in Malaysia”, Cambridge Journal of Economics, 18: 279-98, (1994).
  • Wang, J.,Y. and Blömström, M., “Foreign Direct Investment And Technology Transfer”, European Economic Review, 36: 137-155, (1992).
  • Peck, F. and Stone, I., New Inward Investment and The Northern Region Labour Market Employment, Department Research Series No. 6, Department of Employment, Sheffield, (1992).
  • Rees, G. and Thomas, M., “Inward Investment, Labour Market Adjustment and Skills Development: Recent Experience in South Wales”, Local Economy, 9: 48 – 61, (1994).
  • Lundvall, B.-Å. and Johnson, B. “The Learning Economy”, Journal of Industry Studies, 1(2): 23-42, (1994).
  • Cooke, P. and Morgan, K. The Associational Economy, Oxford, Oxford University Press, (1998).
  • Padilla-Pe´Rez, R., “A Regional Approach to Study Technology Transfer Through Foreign Direct Investment: The Electronics Industry in Two Mexican Regions”, Research Policy, 37: 849-860 (2008).
There are 60 citations in total.

Details

Primary Language English
Journal Section Architecture & City and Urban Planning
Authors

Necibe Aydan Sat

Publication Date December 16, 2011
Published in Issue Year 2011 Volume: 24 Issue: 4

Cite

APA Sat, N. A. (2011). INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY. Gazi University Journal of Science, 24(4), 945-957.
AMA Sat NA. INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY. Gazi University Journal of Science. December 2011;24(4):945-957.
Chicago Sat, Necibe Aydan. “INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY”. Gazi University Journal of Science 24, no. 4 (December 2011): 945-57.
EndNote Sat NA (December 1, 2011) INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY. Gazi University Journal of Science 24 4 945–957.
IEEE N. A. Sat, “INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY”, Gazi University Journal of Science, vol. 24, no. 4, pp. 945–957, 2011.
ISNAD Sat, Necibe Aydan. “INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY”. Gazi University Journal of Science 24/4 (December 2011), 945-957.
JAMA Sat NA. INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY. Gazi University Journal of Science. 2011;24:945–957.
MLA Sat, Necibe Aydan. “INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY”. Gazi University Journal of Science, vol. 24, no. 4, 2011, pp. 945-57.
Vancouver Sat NA. INNOVATION STRATEGIES OF MNCs: A CASE STUDY FROM TURKEY. Gazi University Journal of Science. 2011;24(4):945-57.