Article ID: | iaor20103169 |
Volume: | 56 |
Issue: | 3 |
Start Page Number: | 536 |
End Page Number: | 552 |
Publication Date: | Mar 2010 |
Journal: | Management Science |
Authors: | Kekre Sunder, Xie Jinhong, Debo Laurens G, Sun Jiong |
Keywords: | technology transfer |
Technology transfer to low-cost locations offers global firms an opportunity to reduce their variable costs involved in serving emerging markets. However, such moves may also make imitation by local competitors easier. As a consequence, technology transfer may create competition in the local market. We introduce component-based technology transfer for the global firm as a means to deter or accommodate the imitators' entry, recognizing that components may differ in technological complexity. By choosing a subset of components to transfer, the global firm's decision has an impact not only on the imitators' fixed entry costs, but also on postentry competition based on variable costs. Our research identifies two different types of deterrence strategies–the