Moderating Effect of MNCs’ Equity Ownership in the Relationship between Degree of Inter-Firm Technology Transfer and Local Firms’ Performance

Sazali Abdul Wahab, Raduan Che Rose, Suzana Idayu Wati Osman

Abstract


The inter-firm technology transfers (TT) through international joint ventures (IJVs), among others, have
significantly contributed to a higher degree of local innovation performance/capabilities, technological
capabilities, competitive advantage, organizational learning effectiveness, productivity, technological
development of local industry, and the economic growth of the host country. Since the focus of inter-firm TT in
developing countries has shifted to degree of technology transfer, organizations in developing countries are
attempting to assess not only the significant role of technology transfer in strengthening their corporate and
human resource performance but also the influence of other critical variables such as MNCs’ size, age of JVs,
country of origin, MNCs’ equity ownership (MNCEQTY) and MNC’s type of industries that could significantly
moderate the relationship. Based on the underlying knowledge-based view (KBV) and organizational learning
(OL) perspectives, the main objective of this paper is to empirically examine the moderating effect of equity
ownership of MNCs (50/50 equal ownership between MNCs and local JV partners vs. minor/majority ownership
by MNCs) in the relationships between degree of inter-firm technology transfer and two dimensions of local
firms’ performance: corporate (CPERF) and human resource (HEPERF) performances. Using the moderated
multiple regression (MMR) analysis, the theoretical models and hypotheses in this study were tested based on
empirical data gathered from 128 joint venture companies registered with the Registrar of Companies of
Malaysia (ROC). The results revealed that equity ownership of MNCs has been established to provide a
significant moderating effects in 1) TTDEG-CPERF relationship; where the relationship was found stronger for
minor/majority ownership by MNCs as compared to 50/50 equal ownership between JV partners, and 2)
TTDEG-HRPERF relationship; where the relationship was found stronger for 50/50 equal ownership between
JV partners as compared to minor/majority ownership by MNCs. The study has bridged the literature gaps in
such that it offers empirical evidence and new insights on the significant moderating effects of equity ownership
of MNCs in the relationships between degree of inter-firm technology transfer and local firms’ performance
technology using the Malaysian sample.


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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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