Technological Factors

Affecting MNCs
Presented By
Shamal Firake(37)
Jemy Romany(36)
Pooja Pawar(23)
Dipti Mourya()
Prashant
Mane
(12)
Sanjeev Jha(34)
Harsh Daxini(17)

Agenda
Introduction
History
Motive

& Purpose

Factors
Appropriability

Theory
Key gains from India perspective
Conclusion

Introduction
A

Technological Process is a means to

make and improve products and services.
For example, the traditional manner of
'printing' magazines involved a mechanical
printing press. Now, a new technological
process has been developed to digitize the
magazine to be transmitted and stored
electronically.

Technology

is a much more broader

concept than many people today think it is.
It is the application of knowledge to the
world that allows people to affect their
environment by controlling or changing it.

Introduction
Multinational corporations have long been
recognized as both major creators of technology
and as conduits of technology transfer.
Technology transfer can happen directly, when
the affiliate licenses the technology from the
parent, or indirectly, when the affiliate imports
intermediate goods with embodied technology.
The United States is a major seller of technology,
accounting for around 50% of world royalties and
license fee receipts (World Development
Indicators), and trade in intermediate inputs in
the U.S. accounts for half of total trade in goods
(Miroudot et al. 2009). U.S. Multinational
Corporations (MNC) are important conduits of
technology transfer, with around two-thirds of
royalties and license receipts coming from
intra-.rm transactions and approximately 60% of

History

The
multinational
corporations
have
beginnings in the Industrial Revolution.

their

The traditions and ways of working MNC are called

through "administrative Legacy". IT has given power
to operate in ways never before thought possible.

Utilization of IT has been key element in making

possible the development of entirely new
International business strategies. The new options
that have become available and Technology have
started to change the complexion of international
competition include the following:

History
Global

Inventory
Management
---Manufacturing firms on worldwide basis are
finding IT systems useful for managing inventory
at the global level
even though this
management requires tight timing and logistic
capabilities.
Helps
to
improve
customer
satisfaction. New era of cloud computing taking
data and infrastructure management to next
level.
Worldwide sourcing of components and raw
materials
Decentralized
R&D
collaboration
and
design ---- Electronics firms, petrochemical
firms, pharmaceuticals, and others are finding email, teleconferencing, and high speed networks
are vital for global coordination of their R&D

History

Motive & Purpose

In order to meet the host country consumers

demand, simultaneously causes the research
development
information
channel
internationalization, can quickly make the
response for the global customers demand.

Quickly keep track of host countrys advanced

technology development, make its company
technical level to maintain the advanced level.

Hire the higher level scientists and technicians in

host country, cooperation with their research and
development laboratory.

Motive & Purpose

One suspect that the main profit generator in

international business lies increasingly in an
efficient and accurate international information
system which has the capacity to ascertain almost
instantaneously and on a 24-hour-a-day basis.

Technology has changed nature of data processing

and information control in MNCs. Earlier super
computer power now available on laptop, and
telecommunications with extremely high bandwidth
through technologies such as Synchronous Optical
Network(SONET)
made information available in
many different forms everywhere.

Factors

Creation of technology is a complicated task. However,

inculcation of new technology is crucial for the
economic development of a nation. It is the
multinational
corporations
which
considered
knowledge as a powerful ingredient for growth and
modernization.

Generation of new technology is not an easy task for

the developing countries. On the other hand,
Multinational Corporations (MNCs) qualifies technology
as a private property and have the ability to produce
innovative technologies. Thus, developing countries
rely on multinational corporations. Generating
technology doesnt mean selling technology but
producing and selling products and services which help
the firms in updating and improving their own
technology.

Factors
Patents

allow companies to put their

inventions on lockdown for up to two
decades, reaping rewards for significant R&D
investments. And theres another incentive:
allowing businesses to stock up their
intellectual property war chests and fortify
their
MNC legal defenses.
No of Patents Country of
registered in
2014

Origin

IBM

7534

USA

Samsung

4952

Korea

Canon

4055

Japan

Sony

3224

Japan

Microsoft

2829

USA

Factors
The

Global Innovation 1000, a list of public

companies that spend the most on
innovation, last year invested a record $647
billion, an increase of $9 billion over the
previous year.
MNC Country

R&D
% of Revenue
Spending $
Billion

Volkswagen Germany

13.5

5.2

Samsung Korea

13.4

6.4

Intel USA

10.6

20.1

Microsoft - USA

10.4

13.4

Roche Switzerland

10

19

Appropriability Theory
The environmental factors that govern an
innovator's ability to capture profits
generated by an innovation
The appropriability theory proposes the involvement of
multinational corporations in producing sophisticated
technologies. These corporations do not engage
themselves in producing simple products and simple
technologies which are essential for the developing
countries. The main reason behind it is that
complicated ideas are difficult to imitate whereas
simple ideas are easy to imitate. Thus, there is high
possibility of appropriability problem in case of simple
ideas. Moreover, returns are also higher for
complicated technologies.

Appropriability Theory

Appropriability is "high," and innovators can

protect their profits more easily for sophisticated
technologies and on breakthroughs that can be
transmitted worldwide through the innovator's own
subsidiaries.

Appropriability is "low," and multinationals find it

less profitable to create simple technologies and
ideas that require market transfer.

This theory explains the limited role multinationals

have played in the development of simple products
and simple production technologies, both of which
are important to the developing countries.

 The

Appropriability
Theory

appropriability
theory
of
the
multinational corporation emphasizes the
conflict between innovators and emulators of
new technologies.
The term appropriability refers to the
environmental forces that support private
originators ability to grab profits generated
by an innovation.
This term also signifies the returns from
foreign direct investment by creating new
information.
The procedure of safeguarding the gains
from innovation has been examined by the
multinational corporate behavior in the

Key gains from India perspective

Outsourcing

Centers for key processes setup by

various MNCs

R&D

Outsourcing Pharmaceuticals,
Engineering, IT, Telecom

Product

development centers (Telecom, IT)

Key gains from India

perspective

Key gains from India

perspective
In

modern industrial world, firms investment

in R&D is an important source of
technological progress. Investment in R&D is
required not only for introducing innovations,
but also for adapting and absorbing
technology from outside sources

Conclusion
Reducing

Business Costs

Business owners can use technology to reduce

business costs. Technology helps automate back
office functions, such as record keeping, accounting
and payroll. Business owners can also use technology
to create secure environments for maintaining
sensitive business or consumer information.

Improving

Communication

Technology can help businesses improve their

communication processes.
Using several types of information technology
communication methods allow companies to saturate
the economic market with their message.

Conclusion
Potential

Increase in Business

To reach new economic markets. Rather than just selling

consumer goods or services in the local market, small
businesses can reach regional, national and international
markets.

Sustainability
Technology can also help businesses to meet the issues of
sustainability. Sustainability is now a high priority and
businesses are keen to reduce waste and be more energyefficient. Using more efficient IT systems can help reduce
waste, recycle more or cut carbon emissions. For example
Logica has created innovative software for Ford which
monitors vehicle emissions. If drivers behave in an
environmentally efficient way, they may benefit from fuel
discounts.

References
www.ccsenet.org/journal/index.php/ijbm/article/v

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https://books.google.com/books?
isbn=0024026905
www.freit.org/WorkingPapers/Papers/ForeignInve
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www.ripublication.com/gjfm-spl/gjfmv6n7_06.pdf
http://www.ibef.org/industry/researchdevelopment-india.aspx
http://www.researchgate.net/publication/240695
805_The_Appropriability_Theory_of_the_Multinati
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