IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v28y2007i1p55-68.html
   My bibliography  Save this article

Taking Actively Advantage of MNCs’ Presence

Author

Listed:
  • Chiara Guardo
  • Giovanni Valentini

Abstract

In this paper, not only do we posit that the presence of a multinational corporation may entail significant benefits for the host economy and local firms’ performance, but also that these benefits can be actively sought and dynamically reinforced by local firms through the development of intense, embedded customer–supplier relationships. Building on the relational view, we argue that this may happen through the commitment of resources to relation-specific investments. Our hypotheses find support in a sample of SMEs suppliers of ST Microelectronics, the fourth largest producer of microelectronic components in the world. We show that by making relation-specific investments, local firms can grow quantitatively and qualitatively, improve their innovativeness, and acquire new clients. Copyright Springer 2007

Suggested Citation

  • Chiara Guardo & Giovanni Valentini, 2007. "Taking Actively Advantage of MNCs’ Presence," Small Business Economics, Springer, vol. 28(1), pages 55-68, January.
    • Handle: RePEc:kap:sbusec:v:28:y:2007:i:1:p:55-68
    DOI: 10.1007/s11187-005-6708-8
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11187-005-6708-8
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-005-6708-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Edward J. Zajac & Cyrus P. Olsen, 1993. "From Transaction Cost To Transactional Value Analysis: Implications For The Study Of Interorganizational Strategies," Journal of Management Studies, Wiley Blackwell, vol. 30(1), pages 131-145, January.
    2. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    3. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    4. Xiaming Liu & Pamela Siler & Chengqi Wang & Yingqi Wei, 2000. "Productivity Spillovers From Foreign Direct Investment: Evidence From UK Industry Level Panel Data," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(3), pages 407-425, September.
    5. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January.
    6. M. Bensaou & Erin Anderson, 1999. "Buyer-Supplier Relations in Industrial Markets: When Do Buyers Risk Making Idiosyncratic Investments?," Organization Science, INFORMS, vol. 10(4), pages 460-481, August.
    7. Kim Langfield‐Smith & Michelle R Greenwood, 1998. "Developing Co‐operative Buyer–Supplier Relationships: A Case Study of Toyota," Journal of Management Studies, Wiley Blackwell, vol. 35(3), pages 331-353, May.
    8. Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January.
    9. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 577-598.
    10. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107, Elsevier.
    11. Kathleen M. Eisenhardt & Claudia Bird Schoonhoven, 1996. "Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms," Organization Science, INFORMS, vol. 7(2), pages 136-150, April.
    12. Edwin Mansfield & Anthony Romeo, 1980. "Technology Transfer to Overseas Subsidiaries by U. S.-Based Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 737-750.
    13. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    14. Eden, Lorraine & Levitas, Edward & Martinez, Richard J, 1997. "The Production, Transfer and Spillover of Technology: Comparing Large and Small Multinationals as Technology Producers," Small Business Economics, Springer, vol. 9(1), pages 53-66, February.
    15. Levinthal, D.A. & Fichman, M., 1991. "History Dependence in Professional Relationships : Ties That Bind," GSIA Working Papers 1991-33, Carnegie Mellon University, Tepper School of Business.
    16. Breschi, Stefano & Lissoni, Francesco, 2001. "Knowledge Spillovers and Local Innovation Systems: A Critical Survey," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(4), pages 975-1005, December.
    17. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    18. Masaaki Kotabe & Xavier Martin & Hiroshi Domoto, 2003. "Gaining from vertical partnerships: knowledge transfer, relationship duration, and supplier performance improvement in the U.S. and Japanese automotive industries," Strategic Management Journal, Wiley Blackwell, vol. 24(4), pages 293-316, April.
    19. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    20. Dahlstrand, Asa Lindholm, 1997. "Growth and inventiveness in technology-based spin-off firms," Research Policy, Elsevier, vol. 26(3), pages 331-344, October.
    21. Aitken, Brian & Harrison, Ann & DEC, 1994. "Do domestic firms benefit from foreign direct investment? Evidence from panel data," Policy Research Working Paper Series 1248, The World Bank.
    22. Ariño, Africa & de la Torre, Jose & Ring, Peter S., 2001. "Relational quality: Managing trust in corporate alliances," IESE Research Papers D/434, IESE Business School.
    23. Bengt Holmstrom & John Roberts, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 73-94, Fall.
    24. Almus, Matthias & Nerlinger, Eric A, 1999. "Growth of New Technology-Based Firms: Which Factors Matter?," Small Business Economics, Springer, vol. 13(2), pages 141-154, September.
    25. Desirée Blankenburg Holm & Kent Eriksson & Jan Johanson, 1999. "Creating value through mutual commitment to business network relationships," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 467-486, May.
    26. Susan E Feinberg & Sumit K Majumdar, 2001. "Technology Spillovers from Foreign Direct Investment in the Indian Pharmaceutical Industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(3), pages 421-437, September.
    27. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Foreign Direct Investment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59861-4, December.
    28. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    29. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    30. repec:bla:jecsur:v:12:y:1998:i:3:p:247-77 is not listed on IDEAS
    31. Bornschier, Volker, 1980. "Multinational corporations and economic growth : A cross-national test of the decapitalization thesis," Journal of Development Economics, Elsevier, vol. 7(2), pages 191-210, April.
    32. Anoop Madhok & Stephen B. Tallman, 1998. "Resources, Transactions and Rents: Managing Value Through Interfirm Collaborative Relationships," Organization Science, INFORMS, vol. 9(3), pages 326-339, June.
    33. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    34. Mark Rogers, 2004. "Networks, Firm Size and Innovation," Small Business Economics, Springer, vol. 22(2), pages 141-153, March.
    35. Phillips McDougall, Patricia & Shane, Scott & Oviatt, Benjamin M., 1994. "Explaining the formation of international new ventures: The limits of theories from international business research," Journal of Business Venturing, Elsevier, vol. 9(6), pages 469-487, November.
    36. Gianni Lorenzoni & Andrea Lipparini, 1999. "The leveraging of interfirm relationships as a distinctive organizational capability: a longitudinal study," Strategic Management Journal, Wiley Blackwell, vol. 20(4), pages 317-338, April.
    37. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
    38. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mina Baliamoune‐Lutz & Mohamed A. K. Basuony & Stefan H. H. Lutz & Ehab K. A. Mohamed, 2024. "International ownership and SMEs in Middle Eastern and African economies," African Development Review, African Development Bank, vol. 36(2), pages 279-291, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sinani, Evis & Meyer, Klaus E., 2004. "Spillovers of technology transfer from FDI: the case of Estonia," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 445-466, September.
    2. Veugelers, Reinhilde & Cassiman, Bruno, 2004. "Foreign subsidiaries as a channel of international technology diffusion: Some direct firm level evidence from Belgium," European Economic Review, Elsevier, vol. 48(2), pages 455-476, April.
    3. Klaus E Meyer & Evis Sinani, 2009. "When and where does foreign direct investment generate positive spillovers? A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1075-1094, September.
    4. Hallin, Christina & Holmström Lind, Christine, 2012. "Revisiting the external impact of MNCs: An empirical study of the mechanisms behind knowledge spillovers from MNC subsidiaries," International Business Review, Elsevier, vol. 21(2), pages 167-179.
    5. Argentino Pessoa, 2008. "Multinational Corporations, Foreign Investment, and Royalties and License Fees: Effects on Host-Country Total Factor Productivity," Notas Económicas, Faculty of Economics, University of Coimbra, issue 28, pages 6-31, December.
    6. Mahmut Yaşar & Catherine Paul, 2012. "Firm performance and knowledge spillovers from academic, industrial and foreign linkages: the case of China," Journal of Productivity Analysis, Springer, vol. 38(3), pages 237-253, December.
    7. Y Wei & X Liu, 2006. "Productivity spillovers from R&D, exports and FDI in China's manufacturing sector," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(4), pages 544-557, July.
    8. Patibandla, Murali & Sanyal, Amal, 2005. "Foreign Investment and Productivity: A Study of Post-reform Indian Industry," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 1(1), pages 1-17, June.
    9. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    10. Peri, Giovanni & Urban, Dieter, 2006. "Catching-up to foreign technology? Evidence on the "Veblen-Gerschenkron" effect of foreign investments," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 72-98, January.
    11. Santangelo, Grazia Domenica, 2012. "The tension of information sharing: Effects on subsidiary embeddedness," International Business Review, Elsevier, vol. 21(2), pages 180-195.
    12. Stephen Roper & Nola Hewitt-Dundas & James H Love, 2003. "An Ex Ante Evaluation Framework for the Regional Impact of Publicly Supported R&D Projects," ERSA conference papers ersa03p100, European Regional Science Association.
    13. Chen, Victor Zitian & Li, Jing & Shapiro, Daniel M., 2012. "International reverse spillover effects on parent firms: Evidences from emerging-market MNEs in developed markets," European Management Journal, Elsevier, vol. 30(3), pages 204-218.
    14. Veugelers, Reinhilde & Sanna-Randaccio, Francesca, 2002. "Multinational Knowledge Spillovers with Centralized versus Decentralized R&D: A Game Theoretic Approach," CEPR Discussion Papers 3151, C.E.P.R. Discussion Papers.
    15. Guest Editors & Ana Teresa Tavares & Stephen Young, 2005. "FDI and multinationals: patterns, impacts and policies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 3-16.
    16. Wang, Chengqi & Kafouros, Mario I., 2009. "What factors determine innovation performance in emerging economies? Evidence from China," International Business Review, Elsevier, vol. 18(6), pages 606-616, December.
    17. Harpreet Dusanjh & A.S. Sidhu, 2009. "Multi-spillover Effects of Multinational Corporations on Host Countries," Global Business Review, International Management Institute, vol. 10(2), pages 243-260, July.
    18. Stefano Breschi, 2000. "The Geography of Innovation: A Cross-sector Analysis," Regional Studies, Taylor & Francis Journals, vol. 34(3), pages 213-229.
    19. André van Stel & Jolanda Hessels & Dirk De Clercq, 2006. "Knowledge spillovers and entrepreneurs' export orientation," Scales Research Reports H200619, EIM Business and Policy Research.
    20. Arbussà, Anna & Coenders, Germà, 2005. "Innovation strategies in the presence of technology markets: evidence from Spanish innovative firms," Working Papers of the Department of Economics, University of Girona 15, Department of Economics, University of Girona.

    More about this item

    Keywords

    Relational View; Spillovers; Firms; Growth; Effects of FDI; F23; L14; M10;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:28:y:2007:i:1:p:55-68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.