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International technology transfer through local business linkages: the case of Volvo Trucks and their domestic suppliers in India

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  • Inge Ivarsson
  • Claes Goran Alvstam

Abstract

Using unique firm-level data from Volvo Trucks and their 64 manufacturing suppliers in India, this paper focuses on the significance of technology transfer from transnational corporations (TNCs) to their domestic suppliers in developing countries. Our case study shows that a relatively small number of international follow-source suppliers have captured a dominant part of Volvo's local purchases of components, reducing the opportunities for domestic suppliers to forge business linkages with this foreign TNC. At the same time, the domestic suppliers, as well as the follow-source suppliers, seem to improve their internal capabilities from the technological assistance given by Volvo as part of their business relationships. Even a simple assembly operation by a TNC seems to generate important linkages and technological upgrading among domestic suppliers, thus enhancing their domestic and international market positions. Volvo's technological assistance to domestic suppliers was also transferred down in the supply chain, contributing to long-term improvements among the smaller companies that make up the lower tiers of the Indian auto-component sector.

Suggested Citation

  • Inge Ivarsson & Claes Goran Alvstam, 2004. "International technology transfer through local business linkages: the case of Volvo Trucks and their domestic suppliers in India," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 241-260.
    • Handle: RePEc:taf:oxdevs:v:32:y:2004:i:2:p:241-260
    DOI: 10.1080/13600810410001699975
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    References listed on IDEAS

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    1. Ivarsson, Inge & Alvstam, Claes Goran, 2005. "Technology transfer from TNCs to local suppliers in developing countries: A study of AB Volvo's truck and bus plants in Brazil, China, India, and Mexico," World Development, Elsevier, vol. 33(8), pages 1325-1344, August.
    2. Duanmu, Jing-Lin & Fai, Felicia M., 2007. "A processual analysis of knowledge transfer: From foreign MNEs to Chinese suppliers," International Business Review, Elsevier, vol. 16(4), pages 449-473, August.
    3. Majumdar, Satyajit, 2010. "'How do they plan for growth in auto component business?' - A study on small foundries of western India," Journal of Business Venturing, Elsevier, vol. 25(3), pages 274-289, May.
    4. Appiah-Adu, Kwaku & Okpattah, Bernard K. & Djokoto, Justice G., 2016. "Technology transfer, outsourcing, capability and performance: A comparison of foreign and local firms in Ghana," Technology in Society, Elsevier, vol. 47(C), pages 31-39.
    5. Inge Ivarsson & Claes Göran Alvstam, 2010. "Upstream Control and Downstream Liberty of Action?," Review of Market Integration, India Development Foundation, vol. 2(1), pages 43-60, April.
    6. Ian Goldin & Kenneth Reinert, 2005. "Global capital flows and development: A Survey," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 453-481.
    7. Joanna Scott-Kennel, 2007. "Foreign direct investment and local linkages: An empirical investigation," Management International Review, Springer, vol. 47(1), pages 51-77, February.

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