Impact of Technology on Foreign Companies

Ashley Elizabeth By Ashley Elizabeth, 20th Jan 2015 | Follow this author | RSS Feed | Short URL http://nut.bz/21f43gly/
Posted in Wikinut>Business>IT & Ecommerce

New technology specific to a firm’s products represents a key competitive advantage to firms and challenges international businesses to manage the transfer and diffusion of proprietary technology, with its attendant risks. Whether it is a product, a process, or a management technology, an MNC’s major concern is the approachability of technology that is, the ability of the innovating firm to profit from its own technology by protecting it from competitors.

Impact of Technology on Foreign Companies

The effects of technology on global trade and business transactions cannot be ignored. The Internet is helping the electronic commerce around the world. The ease of use of the Internet raises difficult questions about ownership of intellectual property and consumer protection.

New technology specific to a firm’s products represents a key competitive advantage to firms and challenges international businesses to manage the transfer and diffusion of proprietary technology, with its attendant risks. Whether it is a product, a process, or a management technology, an MNC’s major concern is the appropriability of technology—that is, the ability of the innovating firm to profit from its own technology by protecting it from competitors.
An MNC can enjoy many technological benefits from its global operations. Advances resulting from cooperative research and development can be transferred among affiliates around the world, and specialised management knowledge can be integrated and shared. However, the risks of technology transfer and pirating are considerable and costly. Foreign companies face various restrictions on the creation and dissemination of technology in developed countries.

In most countries, governments use their laws to some extent to control the flow of technology. These controls are used for reasons of national security. Other countries also use their investment laws to acquire needed technology, increase exports, and train local people.

The most common methods of protecting proprietary technology are the use of trademarks, trade names, copyrights, patents and trade secrets. Various international conventions afford some protection in participating countries. More than 80 countries adhere to the International
Convention for the Protection of Industrial for the protection of their patents. However, restrictions and differences in the rules in some countries not signatory to the Paris Union, as well as industrial espionage, pose continuing problems for firms trying to protect their technology.

One risk to a firm’s intellectual property is the inappropriate use of the technology by joint
venture partners, franchisees and employees. Some countries rigorously enforce employee secrecy agreements.

Another major consideration for global managers is the need to evaluate the appropriateness of technology for the local environment. Studying the possible cultural consequences of the transfer of technology, managers must assess whether the local people are ready and willing to change their values, expectations, and behaviors on the job to use new technological methods, whether applied to production, research, marketing, finance, or some other aspect of the business.

When the choice is left to international managers, experts in economic development recommend that managers make informed choices about appropriate technology. The choice of technology may be capital intensive, labor intensive, or intermediate, but the key is that it should suit the level of development in the area and the needs and expectations of the people who will use it.

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Technology, Technology Advancement, Technology On Global

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