Strategy of Developing Countries to Assimilate the Knowledge Generated Abroad

Subject: Business
Type: Analytical Essay
Pages: 5
Word count: 1258
Topics: International Business, International Relations


In the present globalized business environment, every organization is aiming to initiate innovative process, technology of strategy for achieving continuous success in the market. Almost all the major multinational companies have managed to gain benefit from globalization with the use of advance knowledge and skills. Less developing countries (LDC) offer huge potential market for business expansion that eventually creates opportunity for knowledge dissemination. However, the impact of international knowledge transferring in developing countries can vary from one economy to another (Kang, Rhee and Kang, 2010). For that reason, it is essential to understand the level of impact appropriate use of knowledge transferring process can have on developing. It is also crucial to identify the policies or strategies that facilitate or limit the transferring process of international knowledge. The essay will try to provide a clear picture about all the factors associated with the international knowledge transferring process.

Impact of international knowledge transfer in the developing countries

Liberalization in international trade policies across the globe has increased the international transmission of knowledge significantly over the past few decades. Presently, almost all the developing countries are hosting hundreds of foreign multinational companies. It not only has provided opportunity for the foreign companies to expand their revenue level but also smoothen the process of international knowledge transferring significantly. According to Wilensky (2015), foreign multinational companies possess the most advanced technological skills and knowledge. Therefore, these organizations often try to introduce new technology within the developing countries, which in turn create positive impact on the scientific and technological knowledge base. 

In-depth knowledge about different advanced tools and technologies has encouraged businesses in developing countries to formulate more innovative strategies for the business expansion. In fact, it provides local businesses with a clear idea regarding the required level of technical superiorities for achieving success in the global market. Thus, it reflects that international knowledge transferring can actually increase the global trade level of developing countries considerably. As a result, it is likely to enhance the overall GDP level of developing countries as well.

Government policies and strategies to facilitate access to knowledge and technology

Less developed countries’ capacity to generate new technologies and innovations are almost negligible. In fact, these economies depend heavily on the scientific and technological activities of developed countries to fulfill production requirements. In order to gain benefits from international knowledge transmission process, governments of various developing countries haveopted to initiate different strategies. Firstly, the governments of LDCs have aimed to exploit international market through national innovations. Therefore, the governments of LDCs have encouraged collaboration of national firms with leading multinational companies within the same field. It can reduce the dependency level of LDCs on foreign developed economy considerably (Wilkesmann and Wilkesmann, 2011). Governments have also concentrated on developing more favorable foreign direct investment (FDI) policies for encouraging foreign investors to increase the inflow of money within the economy. Increase in level of investment will allow LDCs to enhance the number of active firms within the similar industry. In addition, special focus on formulating multilateral agreements on licenses and intellectual property rights (IPR). It will maintain the fair trade condition for foreign companies within the developing countries. 

Secondly, LDCs governments often try to provide additional facilities to multinational companies by providing appropriate land and infrastructure for innovation purpose (Merminod and Rowe, 2012). It allows the foreign companies to perform all the activities related to the innovation and operational procedure with limited cost. Therefore, it definitely strengthens the collaboration with the transnational companies (TNCs) considerably. Moreover, delivery of appropriate infrastructure will increase the overall expertise knowledge and skills. Thirdly, governments aim to achieve global techno-scientific collaborations with the developed country for enhancing the knowledge of the economy appropriately. Therefore, they often develop scientific exchange programs for the students so that they can able to capture in-depth knowledge about various global tools and technologies (Merminod and Rowe, 2012). Similarly, governments of many developing countries have promoted university or industry linkage with international economy for becoming technologically superior (Ankrah et al., 2013). Consortia, scientific parks and projects have been constructed for enhancing the efficiency of technological collaboration level. Use of such strategy is likely to increase the overall technological knowledge of developing countries that might increase the output level of the economy. In addition, it will strengthen the grass root level of knowledge of a developing economy. It will, in turn, assist the developing countries to gain long-term benefit from international knowledge transmission process.  

Limiting factors related to international knowledge transferring process

Developing countries have to deal with different barriers or limiting factors in order to use international knowledge transferring process appropriately. Firstly, knowledge gap between less developing and developing economies has to be highlighted as the key barrier for international knowledge transferring process. People living in developed countries possess in-depth knowledge and skills regarding various advanced tools and technologies. As a result, companies do not have to face any challenge in recruiting people for specific technical position. On the other hand, people in developing countries most often possess no or very little idea about specific advance technology (Contandriopoulos, et al., 2010). As a result, companies struggle to identify people with specific knowledge and skills for suitable technical position. It, in turn, induces the companies to invest more on training and development facilities, which create adverse impact on the operational efficiency. For that reason, many high profile multinational companies remain circumspect at the time of expanding their operation in developing countries.

Moreover, the country’s capability of using advance technology can be considered as another crucial limiting factor associated with international knowledge transferring process. Efficiency of technology transfer can emerge as a prime issue, as it heavily depends on local conditions. For instance, introduction of any advance technology can reduce the labor force requirement of an organization significantly. Majority of the developing countries represent an extremely labor intensified economy (Paulin and Suneson, 2012). Therefore, sudden loss of jobs due to technological advancement can induce organizations to face huge amount of political and legal challenges within the economy. Possibility of such hazardous environment within the workplace has restricted several multinational companies to use their level of innovative knowledge and skills within the developing countries. In addition, unavailability of associated factors related to adoption of any advance technology can create barriers in international technology transferring procedure. A local company can acquire foreign advanced technology to improve its operational efficiency. However, if that particular company failed to increase the demand of offered products and services in the targeted market, introduction of extended operational capacity will be wasted completely. Similarly, advance technological adoption involves huge investment that induces the businesses to face greater level of financial risk (Stevens, 2010). It often restricted the local businesses to implement all the captured knowledge from developed economies in practical world. The fear of incurring lose from the targeted market can induce the businesses to opt for conservative approach at the time of performing all the responsibilities associated with operational process. 


In the present competitive atmosphere, it is essential for all the businesses regardless their geographical orientation to remain updated about all the available advance tools and technologies. Globalization has enabled foreign companies to enter into the market of developing countries without facing too many restrictions. As a result, all the local companies have to face intense competition from the top foreign organizations in order to stay competitive in the market. For that reason, governments of LDCs need to use innovative policies or strategies for developing strong knowledge flow network with the top companies from developed countries. 

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