Technology transfer and international trade: exploring the relationship between the international transfer of technology and international trade theory

Summary form only given. The growth in the volume and value of international trade has had a dramatic impact on high technology industries. This paper proposes that there is a previously unexplored relationship between the international transfer of technology, the product life cycle, and international trade. The model proposed suggests that, for products in very early stages of development, developing firms will seek joint ventures with complementary firms in order to add clarification to product dimensions through the R&D process. During the early product life cycle stage, the primary focus of the developing firm will be to establish the new product in the host country. Consequently, little international technology transfer activity would be expected. With the start of the growth stage of the product life cycle, the developing firm will be focused on development of distribution channels and increasing manufacturing capability to service market growth in the host country. Such activity would consume much of the developing firm's attention and focus, leaving little energy for pursuing international opportunities. Late in the growth stage, however, the firm would begin to focus on market expansion in other countries through licensing opportunities. Finally, the host firm would resort to foreign direct investments during the later stage in attempts to gain competitive advantages and extend the product life cycle.