Globalization Effects: Management of Technology between Two Firms in a Mutual Relationship

Global arena is highly competitive for firms who try to sell similar, even though differentiated, products; but on the other hand this weakness may prove to be a strength for firms nourishing innovative ideas by making use of the flexibilities imposed by globalization and gain competitive advantage by the usage of appropriate technology. In this paper, the effect of globalization on new product development process is investigated where a firm is moving its production to another firm in another country, which is usually a developing country, so as to reduce the total cost of production and therefore maximize profits. The major gain for the firm operating at the developing country is the transfer of technology from the master firm, but the management of this technology involves the interaction between the two firms, which may prove to be problematic. This paper focuses on the problems that emerge between the two firms in such a mutual relationship and tries to build up a conceptual model that explains this relationship. A case study is carried out where a firm at a developing country is trying to satisfy the needs of the master company to exemplify a real life situation