International Intrafirm Transfer of Management Technology by Japanese Multinational Corporations

Authors analyze the pattern of intrafirm transfer of management technology from Japanese multinational corporations (MNCs) to their overseas affiliates by using firm-level micro data and discern the determinants of the extent of technology transfer achieved. Defining intrafirm transfer of technology achieved as the case where responsibility of the task such as top management, sales, and labor management is given to local staff rather than Japanese staff, authors found that top management has been transferred at a limited number of affiliates, while the task of labor management has been transferred at many affiliates. Among the affiliates in different regions, technology transfer has been relatively more extensively achieved at affiliates in Europe, while it has been relatively limited at affiliates in ASEAN countries. An examination of the determinants of technology transfer revealed that the length of operation of the affiliates, and the quality of labor in the host countries have significantly positive impacts for the affiliates in Asia. These observations indicate the importance of providing an FDI friendly environment, under which MNCs are likely to stay for a long period, and the importance of improving the quality of human resources through education and training, in order to promote intrafirm transfer of management technology.