Managing “Forced” Technology Transfer in Emerging Markets: The Case of China

Dan Prud'homme*, Max von Zedtwitz

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This paper explores how foreign multinational corporations (MNCs)manage risks associated with “forced” technology transfer (“FTT”)policies in emerging markets. Although MNCs are increasingly exposed to appropriability risks from these policies, how they respond is relatively understudied in international business (IB)research. We explore this topic based upon a survey and interviews with Western MNCs doing business in China, as well as a discussion about the recent US-China trade war. We find that, as traditional IB theory would predict, internally-oriented strategies (e.g., internalization, maintenance of informal intellectual property (IP), and control of technological centrality and sophistication)are often used to respond to FTT policies; however, the risks from such policies can sometimes be more efficiently managed by externally-oriented strategies (e.g., non-market activities and reliance on formal IP). We discuss how the co-evolution of MNCs' risk management strategies alongside changing value chains, IP institutions, and conditions determining the leverage of FTT policies appear to contribute to this phenomenon. We argue that IB research should more prominently recognize the role of externally-oriented strategies, not only internally-oriented ones, in managing the complex IP-related institutional challenges present in emerging markets today.
Original languageEnglish
Article number100670
JournalJournal of International Management
Volume25
Issue number3
Number of pages14
ISSN1075-4253
DOIs
Publication statusPublished - 2019
Externally publishedYes

Keywords

  • Forced technology transfer policies
  • MNCs
  • Internally-oriented strategies
  • Externally-oriented strategies
  • Institutional theory
  • Intellectual property
  • Global value chains

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