MNC Strategies and Linkage Effects in Developing Countries

Hansen, Marit; Pedersen, Torben; Preuß, Björn

doi:10.2139/ssrn.982829

Cited by 29 publications

(38 citation statements)

References 71 publications

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“…As a result of having control over new business functions, the affiliate can better respond to demands in the local environment, and in particular the intensity of local business relationships. This is in line with the argument that "competences" of a foreign affiliate engender nonpecuniary spillovers to domestic firms (Crespo & Fontoura, 2007) and generate "higher levels" of linkages in host developing economies (Hansen, Pedersen, & Petersen, 2009). Thus, we hypothesize:…”

Section: Literature Review and Research Questions (A) Relationship Besupporting

confidence: 87%

Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages

2012

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Traditional models of technology transfer via FDI rely upon technology gap and absorptive capacity arguments to explain host economies' potential to benefit from technological spillovers. This paper emphasizes foreign affiliates' technological heterogeneity. We apply a novel approach differentiating extent and intensity of backward linkages between foreign affiliates and local suppliers. We use survey data on 809 foreign affiliates in five transition economies. Our evidence shows that foreign affiliates' technological capability, embeddedness and autonomy are positively related to knowledge transfer via backward linkages. In contrast to what is widely assumed, we find a non-linear relationship between extent of local sourcing and knowledge transfer to domestic suppliers. Crown

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Section: Literature Review and Research Questions (A) Relationship Besupporting

confidence: 87%

Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages

2012

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“…Many studies have found positive impacts of exporting on firm performance, including innovation (Aw and Hwang, 1995;Baldwin and Gu, 2004;Bernard and Bradford Jensen, 1999;Salomon, 2002). Others have revealed positive impacts of forward and backward linkages of FIEs in host economies (Altenburg, 2000;Hansen et al, 2009;Ivarsson and Alvstam, 2005;Lall, 1980;Lim and Fong, 1982;Scott-Kennel and Enderwick, 2005;Zhou and Tong, 2003). We argue that the discussion on impacts of supplier -client connections with foreign firms on domestic firms in developing countries is incomplete without a consideration of the international division of labor.…”

Section: Introductionmentioning

confidence: 79%

“…As highlighted in the literature on international business, linkages are the key mechanism for knowledge and technology to transfer from foreign direct investment (FDI) to developing countries. Without linkages, FDI may create an "economic enclave" (Hansen et al, 2009) or "Cathedrals in the desert" (Hardy, 1998), which exploit the advantage of low costs and resources, and have very limited sustainable positive impact on the local economy in developing countries (Altenburg, 2000;Giroud, 2000;Gorg and Strobl, 2001;Hardy, 1998;Scott-Kennel and Enderwick, 2005). As suppliers to foreign firms, domestic firms are able to better understand the trend of market demand and are subject to more demanding requirements.…”

Section: Introductionmentioning

confidence: 99%

Domestic Firm Innovation and Networking with Foreign Firms in China's ICT Industry

Sun

2011

Environ Plan A

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This study systematically analyzes the impacts of supplier-client and technological linkages with foreign firms on domestic firm technological innovation, based on a unique dataset that was collected through a survey of over 600 firms in China's information and communication technology industry. The results revealed that Chinese firms were engaged in extensive supplier-client relationships with foreign firms, although their technological collaborations with foreign firms were very limited. It was found that firm innovation benefited significantly from technological relationships with foreign firms. However, the results also suggest that, although export/import did contribute to domestic firm innovation, supplier-client relationships with foreign-invested enterprises in China did not show positive effects on domestic firm innovation. The analyses further suggest that such market transactions between domestic and foreign firms helped building technological linkages between domestic firms and foreign firms. These results clearly demonstrate the value of networking in enhancing firm innovation in developing countries.

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“…Recent years have witnessed multinational enterprises (MNEs) changing strategies to exploit opportunities for the global division of labor (Hansen et al, 2009), which has led to them receiving increased interest from researchers and governments as 'agents of host country economic development' (Scott-Kennel and Enderwick, 2005, p. 105). A general consensus of this research is that FDI [Foreign Direct Investment] offers an additional channel for the introduction of technology, innovation, new ideas, different organizational practices and new skills to a host country (Scott-Kennel and Enderwick, 2005, p. 112), an assertion in line with another widely accepted notion that MNEs possess superior technological and managerial advantages, and when this knowledge is diffused to local firms, it enhances endogenous firms' own capabilities (Jindra et al, 2009, p. 167).…”

Section: Introductionmentioning

confidence: 99%

“…In the wake of the rise of alliance capitalism (Dunning, 1995), these have been suggested as key mechanisms through which technology and know-how are transferred from foreign to local partner firms (Hansen et al, 2009), and such alliances, in turn, are suggested as functioning as knowledge diffusion sources to promote the wider upgrading of host country knowledge. That alliance activity holds out great developmental prospects is supported by Scott-Kennel's (2007) empirical results using data from New Zealand to show that the spillover potential of alliances is particularly noteworthy, and that alliances tend to be more associated with assistance and resource exchange than such other linkages as buyer and supplier ties.…”

Section: Introductionmentioning

confidence: 99%

Cooperation in International Strategic Alliances and Impact on Host Economies: Knowledge Transfer and Diffusion to Local Firms

Christoffersen¹

2013

Eur J Dev Res

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Researchers have suggested that linkages between multinational enterprises entering developing countries and local firms can promote knowledge upgrading in local firms. Alliances are a particularly intense type of linkage, and this study investigates how the construct of cooperation, which is the essence of alliance activity, relates to knowledge transfer from foreign to local alliance partners, and then to how large a proportion of that knowledge is subsequently diffused to other local firms. The results suggest that although alliance cooperation is positively associated with knowledge transfer from the foreign to the local partnerthus raising the potential for knowledge diffusion -it is negatively related to the proportion of that knowledge that is diffused to the local partner's competitors, and only insignificantly to the proportion diffused to its suppliers and customers. However, the difference between the coefficients for diffusion to competitors and to suppliers and customers is significant.Des recherches suggèrent que les relations établies entre les entreprises multinationales s'installant dans des pays en développement et les entreprises locales peuvent contribuer à l'essor des connaissances de ces dernières. Les alliances sont une forme de relation particulièrement intense, et la coopération constitue l'essence même d'une alliance active. Cette étude s'intéresse aux corrélations entre la construction de la coopération et le transfert des connaissances des partenaires étrangers aux partenaires locaux, puis à la part de ces connaissances qui sont ensuite diffusées vers d'autres entreprises locales. Les résultats laissent penser que si la coopération est positivement liée au transfert de connaissances des partenaires étrangers aux partenaires locaux -augmentant ainsi le potentiel de diffusion des connaissances -, elle est par contre négativement liée à la part de connaissances diffusées aux concurrents du partenaire local, et n'a qu'un lien insignifiant avec la part diffusée à ses fournisseurs et clients. Cependant, on constate une différence significative entre le coefficient de diffusion vers les concurrents et ceux vers les fournisseurs et clients.

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MNC Strategies and Linkage Effects in Developing Countries

Cited by 29 publications

References 71 publications

Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages

Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages

Domestic Firm Innovation and Networking with Foreign Firms in China's ICT Industry

Cooperation in International Strategic Alliances and Impact on Host Economies: Knowledge Transfer and Diffusion to Local Firms

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