While MNCs as major actors in international technology transfer (ITT), can be easily understood- as evident by their R&D activities on one hand, and the surge of direct and indirect foreign investments on the other; it is not as easy to explain the preference of MNCs for a particular strategy of transfer over other strategies, since this decision is contingent upon different groups of factors among which include industry specific factors, technology specific factors, transferor specific factors and host country specific factors.
There are many options available to MNCs when it comes to the decision of choosing a strategy of TT. These options fall under two broad categories, namely: direct strategies- intra firm transfers (i.e. to internalize the transfer from MNC to its affiliates), and indirect strategies- inter firm transfers (to externalize the transfer by depending on market mechanism, i.e. arm's length transfer). The choice of a strategy of TT has many consequences on the economic development and technological stance of the receiving/ host country, since the strategy of TT might entail a transfer of inappropriate technology and thus the creation of technology dependency and the discouraging of indigenous technological development of the host country.