The Role of Technological Complexity and Absorptive Capacity in Internalization Decision
Technology transfer costs have a profound influence on the firmâ€™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 AntrÃ s (2005) model. They modify the AntrÃ s 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 AntrÃ s (2005). [Working Paper No. 153]
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