Multinational Companies Presence and Technology Spillover: Firm Level Survey in a Case of Ethiopian Manufacturing Industry

Abstract

This survey is conducted at firm level in Ethiopia to investigate whether there is technology spillover from foreign firms to local firms and if so, to explore the kind of change (i.e. proxy to spillover) and the mode/channels of spillover.  The previous studies often relied on the secondary panel data but unlike the previous one, this study entirely relay on the primary data.  From the survey, we find that the presence of foreign firms brings technology spillover in Ethiopia but at a weak magnitude. Moreover, as confirmed in the survey, in developing countries like Ethiopia, demonstration is the most appropriate spillover channels followed by linkages. Finally, we find that changing the organizational set up and management practices is the most common reaction taken by local firms while product and process changes are proved to be the least kinds of changes against which local firms respond to MNCs influence

Keywords: technology spillover, product capability change, spillover channel, product change