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Upgrading against the odds: How peripheral regions can attract global lead firms

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Abstract

Building linkages with global lead firms, called strategic coupling, can be an effective way for emerging economies to upgrade into higher-level market capabilities. However, strategic coupling can be very difficult in particular for peripheral regions, which typically lack the size, skilled labor, and industrial experience to attract and retain lead firms. Sinos Valley in Brazil is an example of a peripheral region experiencing such challenges in the past, including global client switching to lower-cost locations and brain drain to metropolitan areas. Analyzing Sinos Valley’s latest upgrading efforts in the semiconductor industry, we show how local governance actors, including governments, universities, and firms, have jointly managed to lower these risks by building relational specificity with Korean partner organizations. Specifically, they engaged in a multi-layered process of (1) building exchange relations with Korean partners at the government, firm, and university levels; (2) setting up multi-local firm–university linkages; and (3) aligning these linkages with career paths. These alignments helped attract and retain talent by connecting degree and exchange programs with internships and entry-level jobs. Findings demonstrate how peripheral regions can learn to mitigate their disadvantages in upgrading through transnational infrastructures that extend the regions’ capacity to attract talent and firm investments.

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ACKNOWLEDGEMENTS

We would like to thank the handling editor Ram Mudambi for his excellent guidance, as well as two very helpful anonymous reviewers for their feedback. We would also like to thank Roel P.J.H. Rutten and Leon A.G. Oerlemans for reviewing an earlier version of the manuscript, as well as Jörg Raab for inviting us to present the paper at a research seminar at Tilburg University. We are also thankful for feedback from the Druid conference. Finally, we would like to thank the interview partners in Sinos Valley, Brazil, and partner organizations in Korea for sharing their thoughts and perspectives.

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  1. Department of Strategy and Marketing, University of Sussex Business School, Falmer, Brighton, BN1 9SL, UK

    Stephan Manning

  2. UNISINOS University, Av. Unisinos, 950 - Cristo Rei, São Leopoldo, RS, 93022-000, Brazil

    Cristiano Richter

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Accepted by Ram Mudambi, Area Editor, 1 April 2022. This article has been with the authors for three revisions.

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Manning, S., Richter, C. Upgrading against the odds: How peripheral regions can attract global lead firms. J Int Bus Policy 6, 1–23 (2023). https://doi.org/10.1057/s42214-022-00139-8

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