Role of Multinationals on Productivity of Firms Essay

Role of Multinationals on Productivity of Firms - Essay Example A benchmark model to contrast income from local and multinational corporations is an insight to the contribution of multinational corporations on technology spillovers that benefit local firms. However, results from the case study's contribution of multinationals on growth of firms are quite confusing with both positive and negative contributions. Pertinent questions on the issue of technological advancements attributed to multinationals perturb the numerous stakeholders in this field. Uncertainties lie on whether the technology can be used effectively, competition and the market success of the new technology (Kafouros, 2008). There is evidence of recent appraisal for multinationals with hostilities based on factors such as globalization (Gorg and Greenway, 2004). The caveat of bipartite connection of multinationals and positive effects is always present. Some authors state that these are just effects from subsidiary factors such as inflation tax, currency stability and difficulties by most communities to embrace change (Reinert, Tajan & Glass, 2008). Technology transfer and multinationals Theoretically, the fact that competitive edge given by technological superiority not only improves a firm’s productivity, but also its general economic performance is widely accepted. Kafouros (2008) looks at technology transfer to encompass techniques involving the use of better machinery. This definition is quite constrictive and does not give better insight to the varied advantages of multinationals in technology transfer. A more knowledgeable and pedagogical approach interfaces this concept with innovative organizational, technological, managerial as well as more efficient production processes. More striking, is its recent contribution to globalization and an increase in demand for better produce by consumers. Technology in this context can be looked at in the essence of a form of embodiment. It can be looked at as general information, specific information, practic e and hardware. General information involves conceptual know how on a method of operation or system. For example; learning how to operate machinery. Specific information is just as the title explains; it involves details on the whole process of a technology. For instance, information on what a software is made of, how it operates, in what instances it is used and for what purpose. Procedures are codified instructions in the operations of a certain technology. Lastly, hardware involves information in physical form for example a piece of equipment originating from the source of technology. These technology transfers are usually obtained from spill over channels (Gorg & Greenway, 2004). Imitation, competition, exports and skills acquisition from multinationals are said to be ways of improving productivity. Imitation was successfully used in most Asian countries and Latin America in the manufacturing industry (Aitken & Harrison, 1999, 618). This is more of the transfer of knowledge and should not be confused with replication (Gorg & Greenway, 2004). As noted by Freeman and Shaw (2009), the complexity of a process in conjunction with duration of exposure, greatly determine imitation. Research done by Freeman and Shaw (2009) shows that the presence of multinationals in Japan was an insight to the country’s initial engagement in exportation. The sentiments are shared by other scholars such as Grog & Greenway (2004) who state