Channel for Vertical Spillovers

Abstract

The objective of this study was to fill a research gap, where the channels through which technology and knowledge were transferred remained unexplored in the existing Foreign Direct Investment (FDI) knowledge transfer literature. A case study method was adopted as it is appropriate for exploring the complex process of knowledge transfer. The findings obtained from the case studies were able to demonstrate a positive relationship between MNCs and local innovation where knowledge and technology can be diffused through training programmes offered by MNCs to local suppliers. It provides an understanding as to the extent to which MNCs, through linkages with local firms, may facilitate the innovation activities of said local firms. Policy implications are subsequently discussed and future research suggestions are then put forth.