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The mirage of upgrading local automotive parts suppliers through the creation of vertical linkages with MNEs in developing economies

Khan, Zaheer, Lew, Y.K., Sinkovics, R.R. (2015) The mirage of upgrading local automotive parts suppliers through the creation of vertical linkages with MNEs in developing economies. Critical Perspectives on International Business, 11 (3-4). pp. 301-318. ISSN 1742-2043. (doi:10.1108/cpoib-12-2012-0064) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:59840)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided.
Official URL:
https://dx.doi.org/10.1108/cpoib-12-2012-0064

Abstract

Purpose – This paper aims to explore inter-organizational linkages and the extent of technology transfer and develop propositions related to the linkages, technology transfer and upgrading of local suppliers in developing economies. Design/methodology/approach – The authors conduct a literature review and 50 exploratory interviews with senior managers and policymakers in the automotive parts industry of Pakistan. Findings – The data revealed that three major international joint ventures (IJVs) established in the automotive industry of Pakistan have created significant vertical linkages. However, advanced high-level technology transfer has not actually taken place due to the following reasons: IJV parents are reluctant to engage in technology transfer, there is limited support from local government and local suppliers exhibit limited improvement in their innovation capability. The vertical linkage creation and low-medium technology transfer contributes to incremental product upgrading of the local suppliers, rather than their process upgrading and insertion into the global value chain (GVC). Research limitations/implications – This research looked at technology interactions between IJVs and local tier-1 suppliers (not tier 2 and tier 3) in Pakistan’s automotive industry. This paper’ illustrative case indicates what is required for local suppliers in developing economies to make breakthrough upgrades of their products and processes through their vertical linkages with foreign-owned indigenous firms. Originality/value – Unlike prior research, the authors investigate the role of inter-organizational linkages and the extent of technology transfer, and how these affect local suppliers’ product/process upgrading in the local value chain. Highlighting the illusion of upgrading in the GVC, this paper reveals the difficulties involved in upgrading suppliers’ positions (e.g. insertion and functional upgrading in the GVC) through their vertical linkages with foreign multinational enterprises in developing economies. The illusion of upgrading sheds a rather disappointing light on the position of developing country supplier vis-à-vis their powerful international partners.

Item Type: Article
DOI/Identification number: 10.1108/cpoib-12-2012-0064
Uncontrolled keywords: Developing economy, International joint ventures, Technology transfer, Upgrading, Vertical linkages
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Marketing, Entrepreneurship and International Business
Depositing User: Zaheer Khan
Date Deposited: 11 Jan 2017 11:32 UTC
Last Modified: 05 Nov 2024 10:52 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/59840 (The current URI for this page, for reference purposes)

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