Is foreign technology acquisition to complement or substitute for internal technology development? A case of manufacturing enterprises in Vietnam

Abstract

Purpose This paper aims to examine whether foreign technology acquisition is complementary to internal technology development in the context of a developing country. Design/methodology/approach The selection model developed by Heckman (1979) was applied with the balanced panel data of manufacturing enterprises from the Annual Enterprise and Technology Surveys from 2012 to 2016 conducted by the Vietnamese General Statistics Organization. Findings The results indicate that foreign technology acquisition and internal technology development are complementary innovation options. Particularly, the number of patents granted for manufacturing enterprises positively affects the probability that enterprises acquire foreign technologies. This effect is stronger in cases of high-tech industries than in cases of low-tech industries. Research limitations/implications Regarding the relationship between internal technology development and foreign technology acquisition, the findings suggest that adoption of foreign technology acquisition and priority in budget allocation for foreign technology acquisition are different in nature and that budget allocation is a more complex issue and may depend on other factors. Practical implications For developing countries, governments should adopt policies supporting domestic enterprises in acquiring technologies from advanced countries that could complement the locally developed technologies. These supports should focus on the high-tech or high-innovation rate industries. Originality/value In the context of a developing economy, the complementary effect of internal technology development and foreign technology acquisition is stronger in cases of the high-tech industries than in cases of the low-tech industries.