Which of the following is a strategy MNCs use to transfer technology to a host country?

Which of the following is a strategy MNCs use to transfer technology to a host country?

• A. Licensing and joint ventures
• B. Purely exporting goods
• C. Withholding all R&D from local operations
• D. Limiting training programs

Answer: (A)

Technology transfer happens most effectively when the MNC shares both know‑how and the means to use it in the local economy. Licensing does this by allowing a local firm to use the MNC’s technology, designs, or patents in return for royalties, so knowledge moves without the MNC having to set up abroad. Joint ventures take this further by creating a local company with an equity partner, through which the MNC shares more tacit know‑how, management practices, and production methods, helping tailor the technology to local needs and meet regulatory requirements. These approaches spread technical expertise and build local capability while managing risk for the MNC. Purely exporting goods doesn’t transfer technology, so it doesn’t help the host country build capabilities. Withholding R&D from local operations blocks the sharing of new knowledge. Limiting training programs also reduces the flow of skills necessary to use and improve the technology effectively.

Technology transfer happens most effectively when the MNC shares both know‑how and the means to use it in the local economy. Licensing does this by allowing a local firm to use the MNC’s technology, designs, or patents in return for royalties, so knowledge moves without the MNC having to set up abroad. Joint ventures take this further by creating a local company with an equity partner, through which the MNC shares more tacit know‑how, management practices, and production methods, helping tailor the technology to local needs and meet regulatory requirements. These approaches spread technical expertise and build local capability while managing risk for the MNC.

Purely exporting goods doesn’t transfer technology, so it doesn’t help the host country build capabilities. Withholding R&D from local operations blocks the sharing of new knowledge. Limiting training programs also reduces the flow of skills necessary to use and improve the technology effectively.