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Strategy and structure of service multinationals and their impact on linkages with local firms

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  • Marcela Miozzo
  • Mo Yamin
  • Pervez N. Ghauri

Abstract

Drawing on case studies of two leading UK service firms in five host countries (Argentina, Brazil, China, Korea and Malaysia), we examine how the strategy and organization of service multinationals shape the development of linkages with local firms in host economies. We find that there is reduced autonomy of subsidiaries to engage with local firms as a result of relatively centralized strategies of multinationals. Because of global policies ensuring consistency of services or global sourcing policies to reduce costs, service multinationals tend to prefer global suppliers. Backward linkages occur in a few cases when the relationship can be a vehicle for market expansion for the multinational in a particular host market. Local governments play an important role in the cases where backward linkages are developed.

Suggested Citation

  • Marcela Miozzo & Mo Yamin & Pervez N. Ghauri, 2012. "Strategy and structure of service multinationals and their impact on linkages with local firms," The Service Industries Journal, Taylor & Francis Journals, vol. 32(7), pages 1171-1191, January.
    • Handle: RePEc:taf:servic:v:32:y:2012:i:7:p:1171-1191
    DOI: 10.1080/02642069.2012.662492
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    References listed on IDEAS

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    1. Matouschek, Niko, 1999. "Foreign Direct Investment and Spillovers through Backward Linkages," CEPR Discussion Papers 2283, C.E.P.R. Discussion Papers.
    2. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, April.
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    Cited by:

    1. Conti, Giuliano & Lo Turco, Alessia & Maggioni, Daniela, 2014. "Spillovers through backward linkages and the export performance of business services. Evidence from a sample of Italian firms," International Business Review, Elsevier, vol. 23(3), pages 552-565.
    2. Orlic, Edvard & Hashi, Iraj & Hisarciklilar, Mehtap, 2018. "Cross sectoral FDI spillovers and their impact on manufacturing productivity," International Business Review, Elsevier, vol. 27(4), pages 777-796.
    3. Li, Ying & Shou, Yongyi & Ding, Ronggui & Sun, Tao & Zhou, Qing, 2019. "Governing local sourcing practices of overseas projects for the Belt and Road Initiative: A framework and evaluation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 212-226.
    4. Ha, Yoo Jung & Giroud, Axèle, 2015. "Competence-creating subsidiaries and FDI technology spillovers," International Business Review, Elsevier, vol. 24(4), pages 605-614.
    5. Helena Turunen & Niina Nummela, 2017. "Internationalisation at home: The internationalisation of location-bound service SMEs," Journal of International Entrepreneurship, Springer, vol. 15(1), pages 36-54, March.

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