The ‘black box’ syndrome in technology transfer and the challenge of innovation in developing countries. The case of international joint venturesin Malaysia

Technology transfer practices, though widely orchestrated for their significance, are rarely known for leading innovation and technological progress in developing countries. The gap between the acts of transfer and innovation has persisted mainly for two reasons. First, the orientation of learning and skill-development strategies in developing countries has largely been geared to sustaining rather than challenging or building on the prevailing state of knowledge. Second, the focus of policy on technology as a ‘black box’ entity has left the underlying issue of institutional and organizational fragmentation in developing countries unattended. Joint ventures are often preferred to other methods of technology transfer for their impact to break the cultural mould in the ‘black box’ and set the forces of change in motion. But they constitute only a small proportion of foreign direct investment (FDI) in developing countries; and where they occur, local partners are often relegated to activities that hardly involve the challenge of innovation. There is now a growing tide of awakening in developing countries that technology transfer can be better managed to leverage local innovation effort. Using the experience of Malaysia in technology transfer and economic growth, this paper discusses policy issues that would need to be addressed to enhance the effectiveness of technology transfer, in general, and joint ventures, in particular, as a vehicle for innovation and sustainable development.