Impact Of Privatization On R&D Activities: The Case Of Turkish Telecommunications Industry

The debates surrounding privatization have generally focused on comparison of the productivity performances of public and private firms in different countries on the bases of quantitative methods. The main purpose of this paper is to draw attention to a very important repercussion of foreign ownership through privatization that is the changing nature of the privatized firms’ R&D activities in a strategically very important industrial sector in a developing country. After presenting the case studies conducted in the two most important Turkish telecommunication equipment manufacturing firms with the background of the sector’s development history in Turkey, the paper will exhibit the impact of foreign ownership on the nature of firms’ R&D activities after privatization as a result of the parent firm’s global firm strategy. Finally, it will draw policy implications of such changes for developing countries’ technology capability development efforts as well as the countries’ technological dependence in a strategically important industry.