Abstract
Abstract and Key Results
-
This paper investigates the quantity and quality of indirect, transactional and collaborative linkages between foreign affiliates and domestic firms based in New Zealand. Seven clusters of affiliates are differentiated by linkage formation behaviour.
-
Only fourteen percent of affiliates actively engaged in a broad spectrum of linkages, including alliances. Thirty-nine percent appear limited to demonstration and competition effects. Researchers and policy makers should recognise FDI heterogeneity with regard to impact on domestic industries.
-
The results find competitive influence, levels of competition, motives for investment, business activity, technology transfer, age and ownership form are significantly associated with linkage clusters.
Similar content being viewed by others
References
Aitken, B., G./ Hanson, H./ Harrison, A. E., Spillovers, Foreign Investment and Export Behavior, Journal of International Economics, 43,1/2, 1997, pp. 103–132.
Aitken, B. J./ Harrison, A. E., Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela, American Economic Review, 89,3, 1999, pp. 605–618.
Barkley, D./ McNamara, K., Local Input Linkages: A Comparison of Foreign-Owned and Domestic Manufacturers in Georgia and South Carolina, Regional Studies, 28,7, 1994, pp. 725–737.
Barrow, M./ Hall, M., The Impact of a Large Multinational Organization on a Small Local Economy, Regional Studies, 29,7, 1995, pp. 635–653.
Belderbos, R./ Capanelli, G./ Fukao, K., Backward Vertical Linkages of Foreign Manufacturing Affiliates: Evidence from Japanese Multinationals, World Development, 29,1, 2001, pp. 189–208.
Bell, M./ Marin, A., Where Do Foreign Direct Investment-Related Technology Spillovers Come from in Emerging Economies? An Exploration in Argentina in the 1990s, The European Journal of Development Research, 16,3, 2004, pp. 653–686.
Bellak, C., How Domestic and Foreign Firms Differ and Why Does it Matter?, Journal of Economic Surveys, 18,4, 2004, pp. 483–514.
Bertschek, I., Product and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment, The Journal of Industrial Economics, 43,4, 1995, pp. 341–357.
Bosco, M. G., Does FDI Contribute to Technological Spillovers and Growth? A Panel Data Analysis of Hungarian Firms, Transnational Corporations, 10,1, 2001, pp. 43–68.
Blomström, M., Foreign Investment and Spillovers: A Study of Technology Transfer to Mexico, London: Routledge 1989.
Blomström, M./ Kokko, A., Multinational Corporations and Spillovers, Journal of Economic Surveys, 12,3, 1998, pp. 247–278.
Blomström, M./ Kokko, A., Foreign Direct Investment and Spillovers of Technology, International Journal of Technology Management, 22,5/6, 2001, pp. 435–454.
Brown, R., Electronics Foreign Direct Investment in Singapore: A Study of Local Linkages in Winchester City, European Business Review, 98,4, 1998, pp. 196–210.
Cantwell, J./ Piscitello, L., The Location of Technological Activities of MNCs in European Regions: The Role of Spillovers and Local Competencies, Journal of International Management, 8,1, 2002, pp. 69–96.
Caves, R. E., Multinational Firms, Competition and Productivity in Host-Country Markets, Economica, 41,162, 1974, pp. 176–193.
Chen, H./ Chen, T.-J., Foreign Direct Investment as a Strategic Linkage, Thunderbird International Business Review, 40,1, 1998, pp. 13–31.
Chen, T.-J./ Chen, H./ Ku, Y.-H., Foreign Direct Investment and Local Linkages, Journal of International Business Studies, 35,4, 2004, pp. 320–333.
Collis, C./ Noon, D./ Berkeley, N., Direct Investment from the EC: Recent Trends in the West Midlands Region and their Implications for Regional Development and Policy, European Business Review, 94,2, 1994, pp. 14–19.
Crone, M./ Roper, S., Local Learning from Multinational Plants: Knowledge Transfers in the Supply Chain, Regional Studies, 35,6, 2001, pp. 535–48.
De Mello, L., R., Foreign Direct Investment in Developing Countries and Growth: A Selective Survey, The Journal of Development Studies, 34,1, 1997, pp: 1–34.
Dillman, D. A., Mail and Telephone Surveys: The Total Design Method, New York: John Wiley & Sons 1978.
Dillman, D. A., Mail and Internet Surveys: The Tailored Design Method, New York: John Wiley & Sons 2000.
Driffield, N./ Noor, A. H. M., Foreign Direct Investment and Local Input Linkages in Malaysia, Transnational Corporations, 8,3, 1999, pp. 1–24.
Driffield, N./ Munday, M./ Roberts, A., Foreign Direct Investment, Transactional Linkages, and the Performance of the Domestic Sector, International Journal of the Economics of Business, 9,3, 2002, pp. 335–351.
Dunning, J. H., Multinational Enterprises and the Global Economy, Wokingham: Addison-Wesley Publishing Company 1993.
Dunning, J. H., American Investment in British Manufacturing Industry, London, New York: Routledge 1998.
Dunning, J. H./ Narula, R., Foreign Direct Investment and Governments: Catalysts for Economic Restructuring, London, New York: Routledge 1996.
Eden, L. E./ Levitas, E./ Martinez, R. J., The Production, Transfer and Spillover of Technology: Comparing Large and Small Multinationals as Technology Producers, Small Business Economics, 9,1, 1997, pp. 53–66.
Enderwick, P., Foreign Direct Investment: The New Zealand Exerience, Palmerston North: Dunmore Press 1998.
Enright, M. J., Regional Clusters and Multinational Enterprises: Independence, Dependence or Interdependence?, International Studies of Management and Organization, 30,2, 2000, pp. 114–138.
Figueroa, A., Equity, Foreign Investment and International Competitiveness in Latin America, Quarterly Review of Economics and Finance, 38,3, 1998, pp. 391–408.
Fuentes, N. A. F./ Alegria, T./ Brannon, J. T./ James, D. D./ Lucker, W., Local Sourcing and Indirect Employment: Multinational Enterprises in Northern Mexico, in Bailey, P./ Parisotto, A./ Renshaw, G. (eds.), Multinationals and Employment: The Global Economy of the 1990s, Geneva: International Labour Office (ILO) 1993.
Girma, S./H. Görg, H./ Pisu, M., The Role of Exporting and Linkages for Productivity Spillovers from FDI, Research Paper Series: Globalisation, Productivity and Technology, GEP Research Paper No. 30, Nottingham: University of Nottingham 2004.
Girma, S./ Greenaway, D./ Wakelin, K., Who Benefits from Foreign Direct Investment in the UK?, Scottish Journal of Political Economy, 48,2, 2001, pp. 119–133.
Giroud, A., Transnational Corporations, Technology and Economic Development: Backward linkages and Knowledge Transfer in South-East Asia, Cheltenham, United Kingdom: Edward Elgar 2003.
Giroud, A./ Mirza, H., Multinational Enterprises and Local Input Linkages in Southeast Asia, Paper Proceedings of the Academy of International Business Conference: Stockholm 2004.
Globerman, S., Foreign Direct Investment and ’spillover’ Efficiency Benefits in Canadian Manufacturing Industries, Canadian Journal of Economics, 12,1, 1979, pp. 42–56.
Görg, H./ Strobl, E., Multinational Companies and Productivity Spillovers: A Meta-Analysis, Economic Journal, 111,475, 2001, pp. 723–739.
Görg, H./ Strobl, E., Multinational Companies, Technology Spillovers and Plant Survival, Scandinavian Journal of Economics, 105,4, 2003, pp. 581–595.
Grosse, R., The Economic Impact of Foreign Direct Investment: A Case Study of Venezuela, Management International Review, 28,4, 1988, pp. 63–78.
Günther, J., Technology Spillovers from Foreign Investors in Transition Economies, Economic and Business Review for Central and South-Eastern Europe, 7,1, 2005, pp. 5–24.
Håkansson, L./ Johanson, J., The Newtwork as a Governance Structure, in Grabher, G. (ed.), The Embedded Firm: The Socio-Economics of Industrial Networks, London: Routledge 1993, pp. 35–51.
Halbach, A. J., Multinational Enterprises and Subcontracting in the Third World: A Study of Inter-Industrial Linkages, Geneva: International Labour Office (ILO) 1989.
Hood, N./ Taggart, J. H., German Foreign Direct Investment in the UK and Ireland: Survey Evidence, Regional Studies, 31,2, 1997, pp. 139–150.
Ivarsson, I., Collective Technology Learning between Transnational Corporations and Local Business Partners: the Case of West Sweden, Environment and Planning A, 34,10, 2002, pp. 1877–1897.
Ivarsson, I./ Alvstam, C. G., International Technology Transfer through Local Business Linkages: The case of Volvo Trucks and their Domestic Suppliers in India, Oxford Development Studies, 32,2, 2004, pp. 241–260.
Ivarsson, I./ Alvstam, C. G., The Effect of Spatial Proximity on Technology Transfer from TNCs to Local Suppliers in Developing Countries: The Case of AB Volvo in Asia and Latin America, Economic Geography, 81,1, 2005, pp. 83–111.
Ivarsson, I./ Jonsson, T., Local Technological Competence and Asset-seeking FDI: An Empirical Study of Manufacturing and Wholesale Affiliates in Sweden, International Business Review, 12,3, 2003, pp. 369–386.
Kanji, G. K., Statistical Tests, London: Sage 1995.
Khawar, M., The Impact of Multinational Corporations on a Developing Country: A Trade Off in the Long Run?, The Journal of International Trade and Economic Development, 6,1, 1997, pp. 101–112.
Kogut, B./ Chang, S. J., Technological Capabilities and Japanese Direct Investment in the United States, Review of Economics and Statistics, 73,3, 1991, pp. 401–413.
Kokko, A., Technology, Market Characteristics, and Spillovers, Journal of Development Economics, 43,2, 1994, pp. 279–293.
Kokko, A./ Tansini, R./ Zejan, M. C., Local Technology Capability and Productivity Spillovers from FDI in the Uruguayan Manufacturing Sector, Journal of Development Studies, 32,4, 1996, pp. 602–612.
Lall, S., Vertical Interfirm Linkages in LDCs: An Empirical Study, Oxford Bulletin of Economics and Statistics, 42,3, 1980, pp. 203–226.
Lall, S. (eds.), Transnational Corporations and Economic Development, London, New York: Routledge 1993.
Lall, S., Competitiveness, Technology and Skills, Cheltenham: Edward Elgar 2001.
Liu, X./ Siler, P./ Wang, C./ Wei, Y., Productivity Spillovers from Foreign Direct Investment: Evidence from UK Industry Level Panel Data, Journal of International Business Studies, 31,3, 2000, pp. 407–423.
Markusen, J. R./ Venables, A. J., Foreign Direct Investment as a Catalyst for Industrial Development, European Economic Review, 43,2, 1999, pp. 335–356.
McAleese, D./ McDonald, D., Employment Growth and the Development of Linkages in Foreign-Owned and Domestic Manufacturing Enterprises, Oxford Bulletin of Economics and Statistics, 40,4, 1978, pp. 321–340.
McIntyre, J./ Narula, R./ Trevino, L., The Role of Export Processing Zones for Host Countries and Multinationals: A Mutually Beneficial Relationship?, The International Trade Journal, 10,4, 1996, pp. 435–465.
Narula, R., Multinational Investment and Economic Structure: Globalisation and Competitiveness, London, New York: Routledge 1996.
Narula, R./ Sadowski, B., Technological Catch-up and Strategic Technology Partnering in Developing Countries, International Journal of Technology Management, 23,6, 2002, pp. 599–617.
Ozawa, T., Japan: The Macro-IDP, Meso-IDPs and the Technology Development Path (TDP), in Dunning, J. H./ Narula, R. (eds.), Foreign Direct Investment and Governments, London, New York: Routledge 1996, pp. 423–441.
Papanastassiou, M./ Pearce, R., Multinationals, Technology and National Competitiveness, Cheltenham: Edward Elgar 1999.
Perez, T., Multinational Enterprises and Technological Spillovers: An Evolutionary Model, Journal of Evolutionary Economics, 7,2, 1997, pp. 169–192.
Phelps, N. A., Branch Plants and the Evolving Spatial Division of Labour: A Study of Material Linkage Change in the Northern Region, Regional Studies, 27,2, 1993, pp. 87–101.
Poon, T. S.-C., Dependent Development: The Subcontracting Networks in the Tiger Economies, Human Resource Management Journal, 6,4, 1996, pp. 38–49.
Porter, M. E., The Competitive Advantage of Nations, New York: Free Press 1990.
Ruane, F./ Görg, H., The Impact of Foreign Direct Investment on Sectoral Adjustment in the Irish Economy, National Institute Economic Review, 160,2, 1997, pp. 76–86.
Sambharya, R./ Banerji, K., The Effect of Keiretsu Affiliation and Resource Dependencies on Supplier Firm Performance in the Japanese Automobile Industry, Management International Review, 46,1, 2006, pp. 7–37.
Scott-Kennel, J., Foreign Direct Investment: A Catalyst for Local Firm Development?, European Journal of Development Research, 16,3, 2004, pp. 624–652.
Scott-Kennel, J./ Enderwick, P., Inter-Firm Alliance and Network Relationships and the Eclectic Paradigm of International Production: An Exploratory Analysis of Quasi-Internalisation at the Subsidiary Level, International Business Review, 3,4, 2004, pp. 425–445.
Sjöholm, F., Technology Gaps, Competition and Spillovers from Direct Foreign Investment: Evidence from Establishment Data, Working Paper No. 38, European Institute of Japanese Studies 1997.
Sun, H., Direct Foreign Investment and Linkage Effects: The Experience of China, Asian Economies, 25,1, 1996, pp. 5–28.
Sun, H., Macroeconomic Impact of Direct Foreign Investment in China: 1979–96, World Economy, 21,5, 1998, pp. 675–694.
Svetlicic, M./ Rojec, M., Foreign Direct Investment and the Transformation of Central European Economies, Management International Review, 34,4, 1994, pp. 293–312.
Tavares, A. T./ Young, S., Sourcing Patterns of Multinational Subsidiaries in Europe: Testing the Determinants, Proceedings of the UK Academy of International Business Conference, University of Central Lancashire 2002.
Turok, I., Inward Investment and Local Linkages: How Deeply Embedded is ’silicon Glen’?, Regional Studies, 27,5, 1993, pp. 401–417.
Van Den Bulcke, D./ Verbeke, A. (eds.), Globalization and the Small Open Economy. New Horizons in International Business, Cheltenham: Edward Elgar 2001.
UNCTAD, World Investment Report 1999: Foreign Direct Investment and the Challenge of Development, New York, Geneva: United Nations 1999.
UNCTAD, World Investment Report 2001: Promoting Linkages, New York, Geneva: United Nations 2001.
UNCTAD, World Investment Report 2002: Transnational Corporations and Export Competitiveness, New York, Geneva: United Nations 2002.
UNCTAD, World Investment Report 2003: FDI Policies for Development: National and International perspectives, New York, Geneva: United Nations 2003.
UNCTAD, World Investment Report 2005: Transnational Corporations and the Internationalization of R&D, New York, Geneva: United Nations 2005.
Williams, D., Strategies of Multinational Enterprises and the Development of the Central and Eastern European Economies, European Business Review, 97,3, 1997, pp. 134–138.
Wong, P.-K., Technological Development through Subcontracting Linkages: Evidence from Singapore, Scandinavian International Business Review, 1,3, 1992, pp. 28–40.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Scott-Kennel, J. Foreign direct investment and local linkages: An empirical investigation. MANAGE. INT. REV. 47, 51–77 (2007). https://doi.org/10.1007/s11575-007-0004-6
Received:
Revised:
Accepted:
Issue Date:
DOI: https://doi.org/10.1007/s11575-007-0004-6