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The Role of Technological Complexity and Absorptive Capacity in Internalization Decision

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  • Arti Grover

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    Abstract

    Technology transfer costs have a profound influence on the firm’s entry mode into a production sharing relationship. To explore this nexus, they associate technological complexity of the off-shored input with the organizational mode of international production sharing by extending the Antràs (2005) model. They modify the Antràs model by proposing that the low-tech input, as qualified within the model, cannot be produced in the low wage south without costly technology transfer. The cost of technology transfer in turn depends on three factors, which are the technological complexity of this input, the absorptive capacity of the host country and the wages of the host country. Theirmodel refines the results obtained in Antràs (2005). [Working Paper No. 153]

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:2843.

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    Date of creation: Sep 2010
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    Handle: RePEc:ess:wpaper:id:2843

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    Related research

    Keywords: Outsourcing; Foreign Direct Investment; Technology Transfer; Absorptive Capacity;

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    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(6), pages 1119-58, December.
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