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Contents Introduction

This paper investigates the actual mechanism of ‘inter-firm’ technology transfer in the Thai automobile industry and its evolution caused by the development of the industry per se as well as the current structural changes of the industry. The pattern of ‘inter-firm’ technology transfer is explained and examined, based on the findings of two prominent case studies. The case studies indicate that the areas of technological support are equivalent to the ‘process engineering’ capability, which is the area that local suppliers lack and in which they have had less opportunity to accumulate adequate experience. Then, current changes in the production strategies of assemblers are discussed and linked to the evolution of the pattern of ‘inter-firm’ technology transfer. The assemblers’ global purchasing and production policies impose difficulties upon local parts makers. Survey results indicate that local firms have been found lacking in ‘process engineering’ and ‘design’ capabilities, due mainly to the geographic distance between the product development and manufacturing activities. These changes affect the assemblers’ technical requirements for suppliers and the content of inter-firm technology transfer. In this respect, this paper finds that, prior to the year 2000, the contents of inter-firm technology transfer had gradually evolved from simple technology - ‘operational’ technology - to a higher level - ‘process engineering’ technology. Since 2000, the current strategic changes have shifted the content to include ‘product engineering’ capability. However, only some potential local suppliers, which have had long-term relationship with assemblers and indicated an interest in participating in the ‘product development’ stage in Japan, will be given such opportunities and will benefit from the higher level of technology transfer. The suppliers’ own efforts in human-resource development seem to be the most crucial factor in maintaining and continuously developing their technological capability, which in turn will help them benefit from interfirm technology transfer.