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TECHNOLOGY UPGRADING AND THE DEVELOPMENT OF REGIONAL ECONOMIES

TECHNOLOGY UPGRADING AND THE DEVELOPMENT OF REGIONAL ECONOMIES. John W. Medcof, Ph.D . The Michael G. DeGroote School of Business McMaster University Hamilton, Canada. Technology Upgrading. 1.0 Introduction 2.0 Manufacturing Context 3.0 International Business Studies

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TECHNOLOGY UPGRADING AND THE DEVELOPMENT OF REGIONAL ECONOMIES

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  1. TECHNOLOGY UPGRADING AND THE DEVELOPMENT OF REGIONAL ECONOMIES John W. Medcof, Ph.D. The Michael G. DeGroote School of Business McMaster University Hamilton, Canada

  2. Technology Upgrading 1.0 Introduction 2.0 Manufacturing Context 3.0 International Business Studies 4.0 The Chinese Context 5.0 Conclusions technologyupgrading002

  3. 1.0 Introduction Technology Upgrading Technology upgrading is the use of increasingly complex technologies in products and processes, and the development of the increasingly sophisticated managerial and organizational capabilities needed to leverage those technologies for competitive advantage. technologyupgrading002

  4. Technology Upgrading Customer Technical Support Manufacturing Product and Process Adaptation Product and Process Development Basic Research Product Mandate technologyupgrading002

  5. Clusters/Regions “Clusters are geographic concentrations of interconnected companies and institutions in a particular field” Porter (1998) technologyupgrading002

  6. Clusters/Regions Silicon Valley Automobile Cluster in Detroit Hsinchu Industrial Park, Taiwan IT Cluster, Bangalore, India Zhongguancun Zone, Beijing technologyupgrading002

  7. Clusters/Regions Governments foster the development of clusters/regions for their positive economic effects. They attract: Domestic Firms Subsidiaries of MNC’s New Start-ups technologyupgrading002

  8. Subsidiaries of MNC’s Usually enter as low value-added operations: Basic Manufacturing or Sales technologyupgrading002

  9. Subsidiaries with Upgraded Technology 1. Contribute more economic value-added to their clusters 2. Provide greater value-added technological and managerial spillover to their clusters 3. Are less likely to be closed in difficult economic times 4. Have positive spillover effects on sister subsidiaries and their firms in general technologyupgrading002

  10. Technology Upgrading in MNC Subsidiaries What do we know? How do you do it? What are the policy implications? Implications in the Chinese context? technologyupgrading002

  11. Technology Upgrading 1.0 Introduction 2.0 Manufacturing Context 3.0 International Business Studies 4.0 The Chinese Context 5.0 Conclusions technologyupgrading002

  12. 2.0 Manufacturing Context 2.1 Taggart (1998) 2.2 Coughlan and Brady (1996) 2.3 Song (2002) 2.4 Ferdows (1997) 2.5 Noori (1998) technologyupgrading002

  13. 3.0 International Business Studies 1. Delaney (1998) 2. Birkinshaw and Hood (1998) 3. Birkinshaw (1998) technologyupgrading002

  14. 4.0 The Chinese Context 1.0 Xie and Wu (2003) 2.0 Xie and White (2004) 3.0 Zhou and Xin (2003) 4.0 Humphrey and Schmitz (2002) technologyupgrading002

  15. 5.0 Conclusions 1. Subsidiaries evolve: mandates & capabilities change 2. Headquarters, subsidiary, host country roles 3. Technology upgrading can drive subsidiary evolution 4. Organizational and managerial capabilities as important as the technology itself 5. Technology upgrades enhance the cluster 6. Manufacturing and other platforms for tech upgrade 7. Entrepreneurial subsidiary managers continued…… technologyupgrading002

  16. 5.0 Conclusions ……continued 8. Lobbying at headquarters: credibility & support 9. Collaboration with suppliers: capabilities & support 10. Collaborating and lobbying sister subsidiaries 11. Domestic market important in China: subsidiary power 12. Subsidiary research in Europe and North America 13. Learning from subsidiaries important to Chinese technologyupgrading002

  17. 5.0 Conclusions Policy Implications 1. Policy should foster subsidiary technology upgrading 2. Initial agreements for location should foster upgrading 3. Clearly articulate support for upgrading 4. Facilitate communication and travel for subsidiary 5. Facilitate collaboration with local suppliers 6. Facilitate accomplishment of initial mission 7. Facilitate spillover of managerial &organizational skills technologyupgrading002

  18. 5.0 Conclusions Research Implications 1. Lack of research on subsidiary technology upgrading in China: Does it occur? Different from European/American? 2. Does current Chinese policy adequately foster technology upgrading 3. Role of relationship building with government 4. Power relationships between domestic firms and subsidiaries technologyupgrading002

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