Technology transfer from foreign firms to local suppliers through backward linkages in Jordan

This study is an attempt to understand the phenomenon of technology transfer. The study examines the extent of technology transfer from foreign firms to their local suppliers in Jordan, and also investigates the factors that affect the extent of technology transfer. In this study, an effort was made to provide a better understanding of the mechanisms of technology transfer to local suppliers, how foreign manufacturing companies are supporting their local suppliers, and what types of assistance are provided to local suppliers. Furthermore, this study has explored the obstacles to the formation of backward linkages with local firms.

These findings are based on an administrated questionnaire to a sample of 223 foreign firms operating in Jordan and semi-structured interviews conducted with purchasing managers. A total of 93 usable responses were collected, a response rate of 51%. For the purpose of data analysis the study utilises descriptive statistics and multivariate statistics (i.e. multiple regression and correlation analysis).

The results show that the overall level of backward linkages and technology transfer is low. A number of factors affect this transfer, including market orientation, experience of the firm in host country, ownership structure, size of firms, the level of autonomy granted to firms, origin of firms, and geographical proximity. There is a significant relationship between types of industries and the extent of technology transfer. In addition, the findings reveal that most obstacles to the formation of backward linkages with local firms are the lack of local inputs and the poor quality of the locally available inputs; in particular, the specialised intermediates and components.

A distinguishing feature of this study is that it extends previous studies in understanding the phenomenon of technology transfer and the factors that affect this transfer. The results suggest that creation of backward linkages and transfer of technology requires the availability of local suppliers with good quality, sufficient quantity, and competitive cost compared to their previous suppliers. This finding, therefore, raises implications for future technology transfer researchers and, by drawing off backward linkages and technology transfer literature, overcomes some of the deficiencies of previous research relating to backward linkages and technology transfer.