Forms of technological spillovers from multinational companies to small and medium food companies in Nigeria

Foreign direct investment (FDI) provides a source of new technologies, processes, products, and management skills. Thus, the inflow of foreign knowledge and technology though FDI may lead to technological spillovers to the local economy resulting in higher productivity and overall economic growth. Over the years, there have existed many FDIs in Nigeria in the form of multinational companies (MNCs), especially in food industry. The purpose of this paper is to assess the various forms of technological spillovers from MNCs to domestic small and medium food companies (SMFCs) in Nigeria, with a view to determining their nature and extent.

The study employed a multi‐stage sampling method. First, three States from Southwestern Nigeria, where the activities of MNCs are prominent, were purposively chosen. Then, five sub‐sectors of food companies, where the majority of domestic food companies are represented were selected; out of which 200 food companies were chosen for the study through stratified random sampling technique. The primary data were collected through structured questionnaire administered on the selected companies, to elicit information on the various forms of technological spillovers that had taken place.

The various forms of spillovers from the MNCs to the domestic SMFCs in Nigeria were linkages, investment in human capital, and labour turnover. Most of the SMFCs indicated linkages with MNCs, and the relationship was mainly forward type. About 50 per cent and 7 per cent domestic SMFCs benefitted from the training opportunities and from technical assistance from MNCs, respectively. Also, 37.5 per cent of the owner managers had working experience from MNCs in the areas of research and development, production or operation, quality control, and administration. The changes effected in their production technology included embarking on more efficient production and efficient use of existing resources.

Previous studies on technological spillover measured spillovers in terms of productivity gains rather than through technological learning, capability building, and linkages activities. The paper re‐conceptualises technological spillover from MNCs by linking the spillover occurrence to the technological changes associated with the production capability.