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Linkages with Multinationals and Domestic Firm Performance: The Role of Assistance for Local Firms

10th November 2016
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Authors: Holger Görg and Adnan Šerić (European Journal of Development Research, 2016, Vol. 28(4), 605-624.)

This paper uses firm level data for 19 African countries to look at the link between domestic firms’ business relationship with multinationals and their performance in terms of innovation and productivity. Quite uniquely, we also evaluate the importance of support received by the domestic firm, either from the government or the multinational business partner, for this link. Overall, our data analysis shows that for the average domestic firm, supplying to a foreign multinational in the country is positively associated with product innovation. Buying from a multinational is positively associated with labour productivity. These results are independent of any type of support from the government or multinationals. By contrast, we also find that domestic firms’ process innovation activity is only positively associated with supplying a multinational if the firm also receives assistance from the government or multinational. Furthermore, we find that supplying a multinational is only positively associated with domestic firms’ productivity if the firm received technology transfer from the multinational customers.

 

Keywords: linkages, multinationals, spillovers, assistance

JEL: F23, O14

 

DOI: https://doi.org/10.1057/ejdr.2015.33


Involved Team members

  • Prof. Holger Görg, Ph.D.

Involved External Research Fellows

  • Dr. Adnan Seric

Projects

Project 1
Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains
Project 1
Experimental studies of moral responsibility in global supply chains
Project 1
Modelling economic and social dimensions of global supply chains
Project 1
Global supply chains, environmental regulation and green innovation

Other Projects

Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains Experimental studies of moral responsibility in global supply chains
Modelling economic and social dimensions of global supply chains Global supply chains, environmental regulation and green innovation Further KCG Projects

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