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The European Journal of Development Research

, Volume 28, Issue 4, pp 605–624 | Cite as

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

  • Holger Görg
  • Adnan Seric
Original Article

Abstract

This article 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

multinational companies productivity spillovers backward linkages forward linkages Africa 

Abstract

Nous utilisons les données de 19 pays africains pour examiner le lien entre la relation d’affaires qu’ont les entreprises nationales avec les multinationales et leur degrès d’innovation ainsi que leur productivité. Nous évaluons également l’importance du soutien reçu par l’entreprise nationale, que ce soit de la part du gouvernement ou de l’entreprise multinationale partenaire. Dans l’ensemble, notre analyse des données montre que, pour l’entreprise nationale moyenne, le fait d’être le fournisseur d’une multinationale étrangère implantée dans le pays est associé à l’innovation des produits. Le fait d’acheter à une multinationale est associé à la productivité du travail. Ces résultats sont obtenus indépendemment de tout type de soutien gouvernemental ou des multinationales. En revanche, nous constatons aussi que l’innovation de procédé au sein des entreprises nationales n’est associée au fait d’être le fournisseur d’une multinationale que si l’entreprise reçoit également l’aide du gouvernement ou d’une multinationale. En outre, nous constatons qu’être fournisseur d’une multinationale n’est associé à la productivité des entreprises nationales que si l’entreprise a reçu le transfert de technologie des clients multinationaux.

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Copyright information

© European Association of Development Research and Training Institutes (EADI) 2016

Authors and Affiliations

  • Holger Görg
    • 1
  • Adnan Seric
    • 2
  1. 1.Kiel Institute for the World EconomyKielGermany
  2. 2.UNIDOViennaAustria

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