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Does the presence of the foreign firms improve technological capabilities of the local firms?: Case study of the Indonesian automotive sector


Amin, Abdusy Syakur and Hermina, Tinneke (2010) Does the presence of the foreign firms improve technological capabilities of the local firms?: Case study of the Indonesian automotive sector. In: 2nd International Conference on Technology and Operations Management (ICTOM), 5 - 7 July 2010 , Bayview Hotel, Langkawi. (Unpublished)

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Abstract

FDI inflows was expected to bring much needed capital, new machines, new technologies and sciences, marketing techniques and management skills which increase the productivity and competitiveness of the domestic industry. This paper seeks to examine how Indonesian local automotive firms’ technological capabilities have evolved vis-à-vis foreign firms following increased liberalization from the late 1990s.The evidence amassed shows that there were no obvious statistical differences in human resource and process technology capabilities between foreign and local firms in 2006. Although foreign firms enjoyed superior product technologies with access to their subsidiaries, local firms have invested more in R&D technology to compete with them. Foreign firms enjoyed higher export intensities and export experience than local firms, which seems to be a consequence of regional production networks established by foreign multinational assemblers in Southeast Asia.The results confirm that the liberalization experience has driven rather than discouraged stronger initiatives in local firms to raise technological capabilities, though, foreign firms still enjoy higher export-intensities. However, various policies must be taken by Indonesian Government, especially for foreign firms, so they will be imposed to improve significantly their technological capabilities which expected giving multiplier effect such as technology spill over to the local firms.

Item Type: Conference or Workshop Item (Paper)
Additional Information: Organized by UUM College of Business, Universiti Utara Malaysia
Uncontrolled Keywords: Technological capabilities, foreign ownership, export, automotives, Indonesia
Subjects: T Technology > TS Manufactures
Divisions: School of Technology Management & Logistics
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 26 Dec 2011 06:34
Last Modified: 24 Apr 2016 07:01
URI: http://repo.uum.edu.my/id/eprint/4169

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