Upgrading the System of Innovation in Late-Industrialising Countries -The Role of Transnational Corporations in Thailand's Manufacturing Sector

The objective of this thesis is to investigate the potential contribution of transnational corporations (TNC) to the upgrading of systems of innovation in late-industrialising countries. This study looks specifically at TNC-affiliierter in Thailand’s manufacturing sector and compares them with firms in Penang (Malaysia) and Singapore. It examines the technological capabilities of TNC-affiliates vis-à-vis local firms in order to assess whether or not TNC-affiliates are suitable learning and cooperation partners for local firms, and can, consequently, be considered as capable contributors to the improvement of the system of innovation. Based on postal firm surveys of more than 2,000 firms and additional personal interviews, the empirical analysis comes to the conclusion that, in general, this is only partially the case. However, with the analysis shifted to include only advanced firms, TNCs prevail more clearly. Advanced TNCs are especially able to foster the development of the national system of innovation by transferring embodied (e.g. machinery) and disembodied (e.g. patents) technology as well as research results to Thailand. Moreover, they are more frequently embedded in international and domestic knowledge and cooperation networks. In consequence, advanced TNC-affiliates can act as gateways for the diffusion of internationally available technology and knowledge in Thailand. However, the absorptive capacity of local firms for the absorption of new technology and the potential for enhanced innovation activities is restricted, due to a lack of skilled labour. Based on these empirical results, the thesis concludes with policy recommendations.