A co-evolutionary approach to MNE-assisted industry development: Uruguay’s forest-based pulp sector

Abstract

Purpose

This study aims to investigate how co-evolutionary interactions between multinational enterprises (MNEs) and local actors shaped resource-intensive industry development over several decades, examining the economic, industrial and social implications of these interactions. It details the long-term effects of MNEs’ activities on the host country’s economic and social development and unfolds the path-dependent sequence and mechanisms of occurrence.

Design/methodology/approach

In a historical case study of Uruguay’s forest-based pulp sector during the 1970s to 2023, the authors analyze data from interviews with local industry actors and from company archives, academic publications and public environmental organizations.

Findings

The findings untangle the path-dependent co-evolution between MNEs’ activities and local actors and the resulting gradual development of the local industry. The increasing commitment of MNEs to the host country and their engagement with business and social communities impact the development of the industry’s technology basis, activity networks, identity and market. Spillovers and linkages occur in these interactions, driving industry development processes forward. The authors also reveal how MNEs attempt to address the social and environmental tensions associated with their operations to support their long-term presence in the host country.

Research limitations/implications

The authors contribute to the MNE-assisted development literature by untangling the specific mechanisms of MNEs’ engagement in local industry development over a long-term period and elaborating on its industrial and social implications. The authors enhance knowledge about spillovers by capturing a wide range of spillover and linkage effects and assessing their long-term impacts on industry development.

Practical implications

The authors offer insights into how policymakers can tailor instruments for attracting MNEs by adopting a long-term perspective regarding the implications for local development and accounting for economic, industrial and social impacts. This approach can maximize beneficial outcomes from MNEs’ presence and limit tensions between MNEs and local actors.

Social implications

This historical case study illustrates the complexity of MNEs’ engagement with local actors over time, including various tensions and positive developments. It illustrates the importance of social acceptance in achieving quality linkages between local and foreign actors.

Originality/value

This historical analysis untangles the path dependency in the long-term impacts of MNE-assisted development, illustrating the value of a temporal perspective.

Citation

Mihailova, I., Rantanen, S., Tahvanainen, V. and Pykäläinen, J. (2024), "A co-evolutionary approach to MNE-assisted industry development: Uruguay’s forest-based pulp sector", Multinational Business Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MBR-01-2024-0006

1. Introduction

Understanding the impact of multinational enterprises (MNEs) on development has long been an academic research focus (Buckley et al., 2017; Dunning and Fortanier, 2007). A widely discussed assumption is that MNEs possess technological ownership advantages (Oa) over developing countries’ local firms. The presence of MNEs can generate technology transfer, spillovers and linkages that drive local development (Marin and Bell, 2006). However, reports show that few countries have been practically successful in realizing the benefits of foreign direct investment (FDI) (UNCTAD, 1999). Academic findings on MNE-assisted development, which are largely based on an examination of spillover effects, remain inconclusive, offering evidence of positive, negative or nonexistent spillovers (Ascani and Gagliardi, 2020; Jones and Khanna, 2006). One reason for this stems from methodological shortcomings in examining spillover effects associated with the short-term span used to measure local firms’ productivity changes (Driffield and Jindra, 2012). These approaches limit the possibility of fully grasping MNEs’ impact on host countries’ industrial development and do not capture environmental and social outcomes. Recent research has encouraged a critical view of MNEs’ role in developing countries by expanding methodological approaches (Paul and Feliciano-Cestero, 2021) and examining negative and noneconomic implications (Oetzel and Doh, 2009; Bento and Moreira, 2019; Giuliani, 2019). However, little empirical work has been conducted in this direction (Brandl et al., 2021).

To address these limitations, we use a theoretical lens involving a co-evolutionary approach (Nelson and Winter, 1982), which is novel in the literature on spillover and MNE-assisted development, to capture the implications of MNEs’ activities and spillover impacts on local industry and societal development over several decades. This approach was found to be relevant to understanding MNEs’ evolution and institutional development (Cantwell et al., 2010). We argue that co-evolutionary lens will allow us to examine our main research question, which is as follows: How do MNEs’ and local actors’ operations and interactions co-evolve over a long period and generate spillover effects that shape industry development and broad economic and social impacts?

To achieve this objective, we undertake a single case historical analysis to examine the development of Uruguay’s forest-based pulp industry from its inception in the 1970s to 2023. We analyze extensive empirical material comprising primary data sources collected by interviewing industry actors and experts in both the public and private sectors and secondary archival and scientific documents. We use data triangulation to draw reliable conclusions and overcome methodological biases.

Our findings untangle how the path-dependent co-evolution of MNEs’ and local actors’ activities and interactions results in the development of an economically viable industry. We delineate several types of spillovers and linkages occurred from these interactions that drive the process of the industry’s development from the initial to the growth phase. A long-term perspective reveals that local firms’ ability and willingness to cooperate and upgrade their operations supported MNEs’ increasing commitment over several decades and were mutually reinforcing each other. Business cooperation was supplemented by MNEs’ assistance in implementation of education initiatives, infrastructure improvements and support for local communities. However, we also uncovered tensions related to the industry’s negative impacts on the environment and social development. Despite these, local firms’ appreciation of the safety and environmental standards introduced by MNEs, training, job opportunities and livelihood improvements created positive dynamics in MNEs’ and local actors’ relationships over time. These dynamics might have eased the tensions and concerns regarding negative impacts. Thus, we detail a case of MNE-assisted development that generated not only economic but also social impacts.

This study makes three important contributions. First, it extends the literature on MNE-assisted development by showing the spillover mechanisms driving the path-dependent co-evolution of MNEs’ and local actors’ activities through distinctive phases and by illustrating their short-, medium- and long-term industrial and social implications (Zhan and Mirza, 2012). This provides the possibility of making an accurate judgment of the efficacy of and the conditions for the occurrence of such outcomes, extending the literature reporting snapshots of MNEs’ impacts (Jones and Khanna, 2006). Furthermore, a historical approach allowed us to detail the importance not only of MNEs’ technological knowledge but also of their actions for implementing Nordic safety and environmental standards and training affecting changes in local industrial institutional practices (Cantwell et al., 2010), as well as infrastructure and community development. This exhibited MNEs’ ability to transfer their high-order Oa rooted in Nordic corporate values in addition to their traditional technologically based Oa to build local social acceptance, previously labeled as a social license (Narula, 2018). This extends FDI theory by delineating the manner and implications of the complex nature of MNEs’ Oa (Narula and Driffield, 2012) and its importance for long-term industrial and social development, as reflected in the theoretical premises of the New Development Paradigm (Dunning and Fortanier, 2007). This study also highlights how attempts to build social acceptance enabled to counterbalance the influence of local environmental and social tensions related to MNEs’ operational expansions, thus enriching the discussion on the negative impacts of MNEs (Doh, 2019; Giuliani, 2019).

Second, we extend approaches for examining spillover effects by using a novel perspective focusing on analyzing the long-term implications of spillovers for industry development. We show that it takes time to gradually harness the technological and social benefits of MNEs’ spillovers and linkages, underscoring the importance of the temporal dimension and the value of a historical approach for assessing spillover impacts (Buckley, 2016; Decker, 2022).

Third, this research contributes to the literature on industry emergence by unveiling how the dynamics between foreign and local organizations and the environment in a developing economy setting resulted in resource-intensive industry development from the initial to growth phase (Gustafsson et al., 2016). We delineate how foreign MNEs’ and local firms’ strategies coevolved with the institutional environment along path-dependent trajectories, resulting in the gradual advancement of industry sub-processes. The operations and spillovers of MNEs served as important triggers during the process of the industry’s development, supported by responsiveness and the ability of local actors to internalize created externalities.

This research provides important insights from MNEs’ and local firms’ managers by highlighting the benefits of a cooperative attitude for ensuring long-term development and minimizing the societal and environmental drawbacks that occur because of large-scale industrial operations. The study informs policymakers about the importance of a long-term horizon in policy planning to encourage the integration of MNEs’ economic initiatives with those related to the host country’s social and environmental development. These tools could be effective in maximizing spillovers from MNEs’ operations and resolving tensions between foreign and local actors, including societal stakeholders.

2. Theoretical background

2.1 Multinational enterprise-assisted development

The literature has long been interested in how MNEs can generate industrial development in developing economies (Narula and Dunning, 2010). MNEs create various benefits for host countries, incentivizing national governments to attract FDI. They boost local firms’ performance and productivity, mainly through the diffusion of new knowledge and technologies, referred to as spillovers (Rojec and Knell, 2018). Knowledge spillovers can occur through direct mechanisms, such as vertical linkages (Javorcik, 2004), and indirect mechanisms, such as imitation and competition effects (Sinani and Meyer, 2004), or interorganizational worker mobility (Görg and Strobl, 2005). Vertical linkages are formed when MNEs purchase intermediate goods from domestic suppliers (backward linkages) or sell intermediate input to local firms (forward linkages).

Research offers extensive evidence that backward linkages resulting in positive spillovers occur when MNEs (1) provide technical assistance and training for employees to increase the quality of suppliers’ products, (2) help in management and organization, (3) assist in the purchase of raw materials and (4) set high requirements for product quality and service aspects in the supply relationship (Meyer, 2004). In addition to knowledge spillovers, externalities – the occurrence of other outcomes arising from MNEs’ presence – may arise (Narula and Driffield, 2012). For example, institutional externalities occur when the ways in which MNEs operate change the institutional practices of other organizations with which they interact. If these institutional practices are diffused among other companies, they can eventually form accepted practices and norms of behavior and become institutionalized (Cuervo-Cazurra et al., 2019).

2.2 Limitations of research on multinational enterprise-assisted development and spillover

Despite the well-recognized potential benefits of MNE-assisted spillovers and externalities, empirical evidence is far from being conclusive, revealing contrasting results (for a comprehensive discussion, see Ascani and Gagliardi, 2020). For instance, evidence shows that MNEs’ impact can be negative or insignificant (Altomonte and Pennings, 2009). Furthermore, the social implications and negative impacts of MNEs’ presence have not been systematically evaluated (Brandl et al., 2021). Previous research has shown that MNEs’ operations in developing countries may negatively affect safety standards and the environment, as well as support child labor (Oetzel and Doh, 2009). Only recently have studies begun to assess MNEs’ harmful influence on rural populations and inequality (Rygh, 2021). These issues raise concerns for researchers and policymakers, given the importance of FDI-assisted development (Jones and Khanna, 2006). The range of conceptual and methodological approaches must also be expanded for a comprehensive understanding of MNEs’ long-term development impact that goes beyond net productivity (Ascani and Gagliardi, 2020) and captures the processes in which MNEs’ operations create economic, social and environmental consequences for host countries.

2.3 Co-evolutionary perspective for assessing multinational enterprise-assisted development

To address the ambiguity in research on MNE-assisted development, we adopt a co-evolutionary approach, which was initially developed to understand economic change (Nelson and Winter, 1982). Its value has been recognized in international business research, as evolutionary development proceeds through historical time and captures how firms interact with and affect the local environment (Cantwell et al., 2010). We use a historical analysis of MNEs’ operations and interactions with local actors using a strategy of temporal bracketing to identify phases of MNE-assisted industry development. Temporal bracketing strategy implies a decomposition of empirical data into successive adjacent periods to show how the actions in one period lead to context changes that will affect actions in the subsequent period (Langley, 1999). Decker (2022) highlighted the relevance of temporal bracketing strategy to historical research and illustrated its application to structuring the narrative via path dependency. We also use concepts from the knowledge spillover literature to examine the impact of MNE spillovers unfolding over the identified historical phases and to assess their impacts on the local industry’s development from its inception. We rely on Gustafsson et al.’s (2016) framework, which depicts industry emergence as a three-phase process with initial, development and growth phases. The disruption to the existing industrial order in the initial phase triggers co-evolutionary sub-processes, such as the industry’s technology basis, activity networks, market and identity. The co-evolution and convergence of these sub-processes over the phases lead to the development of a new industry.

3. Methodology

3.1 Research design and empirical setting

We adopted a historical approach to examine the co-evolution between MNEs’ activities, local firms and institutional environments, as well as the implications of these interactions for Uruguay’s forest-based pulp sector over the period of the 1970s to 2023. In the tradition of historical research (Decker, 2022), we collected rich empirical data from industry actors, company archives and academic research. Used in combination, these sources provide insights into how and why interactions between different actors unfolded and shaped the industry development process, thus resembling the process study approach (Langley et al., 2013). We applied the temporal bracketing technique (Langley, 1999; Decker, 2022), which involves developing a periodization of events for different industry development phases based on theoretical literature concepts (Gustafsson et al., 2016).

3.2 Data collection

Data were collected from primary and archival sources in several phases to gather evidence of how the industry’s development unfolded and was shaped by different actors.

Primary data collection: We identified key organizations constituting Uruguay’s forest-based pulp industry and approached them for face-to-face interviews. Thereafter, we used the snowball technique to identify key actors in the industry’s public and private sectors through purposeful sampling (Palys, 2008). We aimed for a comprehensive representation of the most relevant actors and different supply chain activities in this sector. First, 19 interviewees from 17 local firms were selected, comprising managers and CEOs of companies in this industry’s supply chain from the following forestry fields: eucalyptus seedling nursery, silviculture, harvesting and wood logistics. Additionally, one interview was conducted with an MNE representative. Second, we interviewed experts in 12 key public and private organizations that were part of Uruguay’s forest-based pulp industry. The 15 expert interviewees were experienced professionals who could reflect on industry-related developments. The interviews took place from September 2018 to December 2018, and the average interview duration was 70 min. The data were carefully interpreted using triangulation techniques to address recall bias. We summarize the content of the interview data in Table 1.

Secondary data: The primary data revealed important aspects, guiding the acquisition of secondary data to develop a holistic understanding of the phenomenon studied. We proceeded by collecting data from MNEs’ archives, industry-specific documents and scientific and mass media publications during the 1970s to 2023. These sources revealed rich insights into the events, dynamics and tensions related to the forest-based pulp industry that occurred over three decades. We summarize these secondary sources in Table 2.

3.3 Data analysis

Primary data: We recorded, transcribed and analyzed the interviews qualitatively using the QSR NVivo 12 software analysis tool. We first identified relevant key themes in the interview data. We created a timeline of events for each theme and attempted to establish the flow of their evolution. Thereafter, we identified concepts depicting the three phases of industry development and its mechanisms by using concepts from Gustafsson et al.’s (2016) framework and studies on MNE spillovers and social implications (Brandl et al., 2021). We created coding structures for the different types of spillover effects and linkages, which are identified in the literature on spillovers. We applied these to the analysis of the interview data, and we created a table in which we documented quotes corresponding to each construct. We did not use the names of the companies and interviewees in the discussion of the findings because of anonymity considerations.

Secondary data: We analyzed archival and publicly available documents to identify the key industry events and activities of local and foreign actors, policy recommendations and social and environmental discussions. We also examined statistical data on industry’s foreign investments to comprehend the industry’s overall historical development. In the discussion of the findings, we used the companies’ names in the same manner as in the data sources.

In the final stage, we conducted a thorough analysis of the main events and all the information according to the timeline and drew conclusions. We used data triangulation, as the archival sources and interview insights were based on the respondents’ retrospective accounts, requiring a combination of intuitive reasoning, revision of sources and recognition of the dualism of the approaches (Rowlinson et al., 2014). The multiple data sources allowed us to identify biases and fill gaps in individual sources (Decker, 2013). In so doing, we attempted to “address questions about how and why things emerge, develop, grow, or terminate over time” (Langley et al., 2013, p. 1) in relation to the development of Uruguay’s forest-based pulp industry.

4. Temporal bracketing: evolution of Uruguay’s forest-based pulp industry

The results of the empirical analysis led us to develop the periodization of the evolution of Uruguay’s forest-based pulp industry during the 1970s to 2023 and detail the path of changes in its main elements. We illustrate these in Figure 1.

Figure 1 shows that the industry evolved through three phases. The initial phase (1970s–1987) began in the early 1970s with the first forestry law (Forestry Law 13723, 1968) focusing on policies to increase forest areas (Morales Olmos, 2007). However, this law did not have its intended impact, and the industry remained limited to small wood plantations for industrial and energy use (Morales Olmos, 2007). Small-scale local tree seedling nurseries, wood harvesting firms and sawmills operated independently. There were also a few sawtimber and pulp production firms with small-scale production, as well as lumber manufacturing firms (Durán, 2004). During the 1970s and 1980s, industrial wood production gradually moved away from energy production to saw milling. An important change occurred when the favorable growing conditions for wood production began to attract foreign firms’ attention. The first pilot research and development (R&D) projects were initiated by Spanish and Japanese MNEs in cooperation with local firms. This, in turn, trigged an increase in interest from local entrepreneurs, who began to establish tree seedling nurseries.

The forest sector’s economic potential became evident, and the government made a commitment to realizing its economic potential. A second forestry law was enacted in 1987 (Act No. 15.939 on Forestry), incentivizing landowners to transform marginal agricultural lands into forest plantations (Morales Olmos, 2007). It also provided investment schemes, including exemptions from net worth tax and import duties (Forest Sector Uruguay, 2021). Soil with good potential for forestry, despite having low productivity for agriculture, was mapped. These changes resulted in increased interest from foreign MNEs and signaled new opportunities for local actors.

The industry’s development phase (1988–2013) is associated with changes from a collection of small-scale forestry activities spread across rural areas to the development of industrial-scale infrastructures for forest-based pulp (Vazquez, 1996). The forest sector began a transformation toward the coexistence of large, vertically integrated firms with many small-scale primary producers and the substantial presence of foreign investors (Lima-Toivanen, 2012; Mendell et al., 2007). A large foreign investment was made by the Finnish MNE Botnia, which initially bought 60% of the Uruguayan company Companía Forestal Oriental S.A. (formerly FOSA). Forestal Oriental is one of Uruguay’s largest forest owners and a pioneer in eucalyptus cultivation and seedling production. In early 2000, Botnia began planning its first pulp mill, worth US$1.2bn. Forestal Oriental had approximately 100,000 ha of eucalyptus plantations to cover about 70% of the mill’s wood needs. The other 30% was covered through wood bought from private landowners with long-term agreements (Morales Olmos, 2007).

These building plans for a large mill created a political conflict between Uruguay and Argentina because of environmental concerns associated with the mill’s operations (Kosonen, 2008). Various media sources referred to this conflict as mainly political in nature (Pakkasvirta, 2008). While Botnia delivered the required environmental reports elaborating on how the technology would not cause significant environmental damage, their results were not trusted by the Argentinian side (Pakkasvirta, 2008). However, with the Uruguayan government’s support, the pulp mill started its operations in November 2007, and in 2009, Finnish company UPM acquired Botnia’s shares. The mill agreement involved training, building manufacturing and providing extensive environmental reports (Lima-Toivanen, 2012). MNE initiated cooperation with local firms and started training local companies and tree seedling nurseries to improve their technological and organizational capabilities. The initiatives of MNE also focused on developing professional training in-house or in cooperation with Finnish actors. Many supply chain firms started with the help of MNEs or former MNEs’ employees after being trained in-house. In 2010, the industry size reached US$1,088,065, and its growth potential was evident (Forest Sector Uruguay, 2021).

These developments attracted further foreign investments. In 2014, the second pulp mill was jointly built by two large MNEs: Stora Enso (Swedish–Finnish) and Arauco (Chile). This marked the beginning of the industry’s growth phase (2014–2023). The industry’s economic size grew during this phase because of the increased demand for raw materials, which resulted in the growth of several local firms in the forest sector and the growth of forest plantation areas. The forest industry’s expansion was supported by infrastructure development initiated by MNEs, particularly in rural areas.

These developments incentivized UPM to build a second mill, which started its operations in April 2023. This was expected to increase Uruguay’s gross domestic product (GDP) by 2% and its renewable energy production by 10% (UPM Pulp, 2023). The industry’s public sector organizations further developed industry standards to monitor firms’ operations. The education sector also expanded the number of university programs in forestry (Forest Sector Uruguay, 2021). The MNEs continued provision of professional training in cooperation with Nordic organizations which has been well received by local industry stakeholders and assisted in implementation of infrastructure projects such as construction of a new rail line (UPM press release, 2020).

In 2021, forestry was regarded as one of the national economy’s major sectors and the driver of Uruguay’s industrial development (Forest Sector Uruguay, 2021). Uruguay’s forest policy succeeded in developing a sector with a strong presence of MNEs driving exports, creating productive uses for poor-quality land and generating income and employment (Morales Olmos and Siry, 2009). Forest plantations reversed unemployment in rural areas, particularly amongst women, and improved the economic conditions of rural population (UPM Pulp, 2020). Yet, some aspects of the forest policy are the subject of heated debate. One aspect concerns the increased competition for land and increased land prices (Morales Olmos, 2007). Another is related to farmers’ complaints about the necessity of moving livestock to new areas once traditional pastures are converted to forestry. Furthermore, pulp mills are located in tax-free zones, thereby limiting the economic benefits. Finally, environmental issues continue to increase (Rain Forest Movements, 2023).

5. Evolution of multinational enterprises’ and local actors’ interactions during the 1970s to 2023, creating spillover mechanisms driving industry development

In this section, we shed light on how path-dependent changes in industry expansion were driven by the interactions between MNEs and foreign actors. We reveal how these interactions co-evolved through the initial, development and growth phases during the 1970s to 2023 and created various spillover effects and social implications driving the development of industry sub-processes.

5.1 Initial phase, 1970s–1987

Establishment of the technology basis and activity networks: The favorable conditions for forest plantations, the advantageous location in terms of logistics and the stable political environment attracted foreign firms’ attention in the early 1980s. Spanish and Japanese pulp industry actors began implementing pilot projects focusing on research on suitable wood species and the development of forest plantations. The projects were conducted in cooperation with local wood production nurseries, with MNEs sharing their knowledge with local experts. A local industry actor explained this as follows:

[The] first project of [a local firm 1] was a joint venture between [MNE X], a Spanish firm at the time, also nationally owned, a government owned firm, and [a local firm 2]. So, at that time, we started this new firm, and I was there trying to develop plantations for pulp. We also brought some technology from Finland.

There were three local pulp industry firms, but their scale was small (Lima-Toivanen, 2012). Some began small-scale export operations in cooperation with MNEs. These activities led to increased entrepreneurial interest in the forest sector and revealed potential growth prospects. The 1987 forestry law implemented a land management program to expand plantations of eucalyptus and pine species to provide raw materials for the wood and pulp industries.

Market emergence and industry identity: The interest of MNEs in the forest sector was also manifested in the purchase of land for planting fast-growing eucalyptus trees. Some of this expansion occurred through the substitution of livestock production, with livestock farmers selling their lands mainly to foreign and large local companies.

Overall, during the initial phase of industry development, R&D projects between foreign MNEs and local actors triggered interest in the industry and created knowledge sharing through backward linkages. These interactions also resulted in the expansion of local firms’ engagement in the industry.

5.2 Development phase, 1988–2013

Establishment of the technology basis and activity networks: The MNEs that expressed interest in the sector realized the need for local resources. They began educating their own employees and partners about wood supply practices and wood and pulp production based on the Nordic forest industry model. As a local industry actor stated, the experience of working in an MNE was valuable, allowing them to acquire extensive new industry knowledge and skills. A governmental organization representative also explained as follows:

[For] example, even engineers, chemical engineers, who have never seen a tree, can adapt to working in this kind of industry very quickly. And that was what happened in the first mill. Many of the people who are now working [there] had never seen a tree before they were hired by [MNE A]. And they sent them to study in Finland. Two years. And they came back. And they became the best [workers].

Given the insufficient capacity of the local forest supply chain, MNEs undertook the necessary initiatives to complement the wood production chain. A respondent from a local firm stated the following:

Because “MNE A” did not have nurseries for seeds and only for plants, this business was offered to contractors.

MNEs recruited local employees and cooperated with local partners; some of these partners were later encouraged and financially supported to establish their own businesses focusing on the country’s wood supply. MNEs also implemented initiatives offering support to local wood supply and logistics firms in developing their operations. A local firm’s manager mentioned:

Since 1990, I’ve worked privately for what is now [MNE 1]. “MNE 1” came in 2005 and asked me whether I could make a nursery for them. So, I did a nursery exclusively for “MNE A” at that time. Now, we’re one of the largest private nurseries in Uruguay.

The data suggest that the baseline of skills and working methods was highly reliant on Nordic forestry practices. However, MNEs adapted to and considered local conditions when collaborating with local firms. As one respondent from a local firm said:

Well, “MNE 1” had meetings to discuss, for example, how to prepare and apply chemicals the proper way, and that’s an instance where they try to spread the knowledge and the right way of doing things.

Local firms were also eager to adopt MNEs techniques and follow successful examples. Another respondent from a local firm explained as follows:

[T]his forestry was new for the country, so most of these things were learned by practice here, and people who were used to work[ing] in the firm [MNE 1] at certain points decided to start giving services to our firm and to other [local] companies.

In this case, MNE 1 was proactive in offering education initiatives to local firms and organizing workshops with participation from the business and education sectors. As local firm manager explained:

“MNE 1” sometimes also conducts workshops about, for example, how to keep plants better in the field. When they’re implementing this workshop, they invite people from the university to discuss, for example, how to control ants.

Furthermore, MNEs had taken initiatives to introduce local suppliers to high technological standards. Local firms needed to adapt their own working methods and technologies to MNEs’ standards and practices. At this stage, the technological and productivity leap was rather major in some cases. One respondent from a local firm said:

It’s not like in Finland where you have a university for operators or for the mechanics of these kinds of machines. Their training at the beginning was based more on trial and error. And we were making mistakes, and we were learning in the process. So, we were working a lot in cooperation with “MNE 1,” and we were also taking courses from them […] After some years, there was a certain number of people who already knew how to do it.

MNEs were increasingly helping local firms reach the Nordic level of technological expertise in forestry. The Nordic ethic of following standards and proactively showing initiative in education and training was appreciated by local actors. Furthermore, MNEs provided some of the raw materials, such as seeds for tree seedlings. In other words, MNEs introduced and imposed industry standards on local firms, boosting their efficiency and productivity. One respondent from a firm stated the following:

The increase in mechanized activities is one of the biggest changes. It’s one of the ways we manage to reduce our costs and keep up with the needs of “MNE 1.”

Education activities, including the development of standards for research and innovation, also increased with the support of governmental institutions (The National Forest Stewardship Standard, 2015). MNEs continued driving adaptations to the operating environment. A local firm interviewee explained this as follows:

The way we work with chemicals and the way we take care of the environment. I mean, in 1995, the way we worked had almost nothing to do with the way we work here now. It’s much safer; 99% of the chemicals are safe and environment friendly.

The initiatives of MNEs were directed at industry cooperation with different local actors. The expansion of the industry’s technological standards and size gave more people an opportunity to stay in rural areas. One local industry actor noted this as follows:

I think that […] the biggest impact in terms of people is that all small companies are working for big companies. And direct impacts. And all the technology they brought and how people decided to live in the countryside instead of living in Montevideo. This is very important stability.

Market emergence and industry identity: The expansion of demand for raw materials for pulp because of MNE operations enabled local firms to become MNEs. A local firm’s manager explained this as follows:

We got to the business in this way. [The MNE] was seeking contractors, [and] we were suppliers for them ‘cause we were buying this standing wood. And we were selling part of the wood to them. So, they saw us as potential contractors, and they invited us to start working as contractors.

MNEs and their home country partners regularly provided training and assistance. The growing industry engendered a need for national education programs to train a competent labor force, leading to the expansion of education provision related to the pulp industry. A local actor emphasized that education developed because of the sector’s demand:

[The] first master’s [degree] in the pulp industry started with […]. When the first European factory started to build because it [had] to train people to work in the [factories] […] it started in the college of engineering with the help of [an organization] in Finland.

Moreover, the national forestry policy encouraged large forestry firms to make long-term contracts with national livestock farmers for wood provision instead of buying land (Brecha, 2006). An expert interviewee described this:

On the social side, it brought many changes; for example, people in the countryside have claimed and reinforced the fact that [because] forestry […] is mostly developed by multinational companies, they can buy the land because they have the resources. So, it has […] accelerated the process of rural exodus by small landowners who [had been] producing cattle on the land for many generations.

However, there were a few disputes related to land purchasing (Morales Olmos, 2007). The plantation pilots were the first step toward creating the industry’s market. Through these projects, MNEs began introducing new forest industry conventions to local entrepreneurs, signaling their intention to expand operations further.

The industry’s development itself triggered the expansion of communities in rural areas where plantations and pulp mills were located, leading to the addition of more services, schools and infrastructure, which, in turn, created more jobs in other sectors. This was summarized as follows (UPM Pulp, 2015):

Thanks to improved employment, regional disparity has leveled out significantly. Thanks to the forest industry, young members of the rural community are now able to study and work in their home regions.

Overall, the development phase was driven by the significant increase in training and educational initiatives to bridge the large knowledge gap between MNEs and local actors, as well as by the introduction of advanced Nordic practices. It was also supported by the initiation of provision of educational programs and community improvements in rural areas.

5.3 Growth phase, 2014–2023

Establishment of the technology basis and activity networks. During this phase, technological developments intensified further because of the increased scale and scope of cooperation between MNEs and local firms. Local firms that became contractors of MNEs were pressured to undertake further mechanization. A local firm respondent explained,

Because the industry was growing when companies such as “MNE 1” and “MNE 2” started the industrial phase, and they were demanding that the contractors also start growing, to start developing in [terms of] mechanization instead of manual harvesting.

Joint development projects were oriented toward broad technological knowledge sharing among industry actors. One of the local firm managers elaborated as follows:

Just because we were working, for example, for “MNE 1,” we were on many projects for developing technology. For example, planting machines, because we all want to maintain manually, so we were working in the field. We were also involved in projects for developing technologies that [MNE 1] is now using. And they help us, help them share with other contractors.

The actions of MNEs led to firms’ broader adoption of Nordic working attitudes and cultures to meet contractual requirements, including forestry certification. Local firms were encouraged to interact with one another and share their knowledge. As one local firm manager reflected:

“MNE 2” has meetings about how to prepare and apply chemicals properly, and it tried to really spread the knowledge and the right way of doing things.

The expansion of MNEs’ pulp mill projects resulted in continuously increasing demand for local suppliers and local supply. Many firms began working as MNEs contractors. The number of firms in the wood supply chain has grown, leading to competition between firms for MNEs contracts. This, in turn, pushed local firms to develop further, as explained by an interviewee:

We’re doing our best to try to grow our activities [for “MNE 1”]. Last year, our firm was ranked [high] by “MNE 1.” So, we’re doing our homework to begin with the second pulp mill [“MNE 2”]. We want to grow, and we think we can.

Local firms continued learning to work independently with fixed-time contracts, further highlighting the need for a professional labor force. MNEs continued to support the expansion of forestry and engineering education programs in pulp and paper manufacturing, as they needed more workers. Forestry courses started to be offered at four universities, some of which also developed degree programs. These initiatives resulted in workers’ countrywide professionalization.

Furthermore, MNEs helped implement training initiatives to create long-term benefits for societal development. A respondent from a global firm noted the following:

Finally, together with “MNE 1” and “MNE 2,” we had a meeting with [local actor], and we proposed conducting the training in a way that it’s really useful. We were looking to give training to mothers with kids but don’t have husbands or single mothers, then for people coming out from the jail, people without any education.

Numerous initiatives were oriented toward integrating the socially vulnerable population, as reported in a UPM press release (2020):

The project called “Communities” contributes to the prevention of [the] sexual exploitation of minors in the zone of influence of the pump mill.

The investment agreement for a third pulp mill also included further infrastructure development, fiscal and regulatory topics, rural and education development initiatives, labor and energy conditions, and environment, forestry, and land planning. One of the priorities in local infrastructure development was to ensure broader population’s safety, as reflected in the UPM press release (2020):

There is a local government traffic team in Paso de los Toros and together with them we managed to strengthen the local tools for road safety.

Furthermore, large investments were made in the port of Montevideo and railway infrastructure.

Market emergence and industry identity: The local market’s growth and the industry’s stabilization aligned with the expansion of MNE-led activities. The number of local firms and their sizes continued to grow, as one respondent noted:

The business must grow because if “MNE 1” develops its second facility, it’s going to need more trees. To have more trees, you [have] to plant more trees; to plant more trees, you need more seedlings.

Economies of scale were important to enhance the efficiency of local firms’ operations, which was necessary to cope with the pressures for decreased prices that MNEs introduced over time. The interviewees still considered the growth positive for their businesses and had optimistic views of the future. Industry-level interest groups and unions were developing alongside the growing industry to include new aspects that an international pulp industry required.

To conclude, during the growth phase, the scope of spillover effects initiated in the development phase further expanded, and new types of spillovers emerged. The number of educational, infrastructure and social initiatives also increased, supporting industry growth.

6. Discussion: path-dependent co-evolution of industry development

The discussion about the periodization of changes reflecting the path-dependent evolution of the forest-based pulp industry (see Figure 1) and reciprocal interactions between local actors and MNEs creating spillover mechanisms and social effects during the 1970s to 2023 led us to develop a framework, which is illustrated in Figure 2. This framework shows the path dependency in industry development manifested in the increase of MNEs’ and local actors’ operations over time, driven by spillover and social effects occurring through co-evolutionary interactions between local and foreign actors.

Our framework suggests that the continuous increase in MNEs investments and local government support served as an important, but not only one driver of the development of the economically viable industry. Importantly, the increase in the MNEs investments was supported by the establishment of the local market and the realization of economies of scale, thus creating opportunities for local firms to grow, enhancing employment and increasing the income of broad levels of the population. Framework illustrates the occurrence of cumulative effects of MNEs operations and their co-evolutionary interactions with local actors occurring over (Pierson, 2000). With these findings, we join the existing dialog about the complexity of MNE-assisted development (Driffield and Jindra, 2012).

The framework in Figure 2 delineates how the expansion in MNEs’ and local actors’ operations was driven by an increase in the scope of spillover and social effects which triggered the transition through the initial, development and growth phases of industry development. Emerged during the initial phase, backward linkages were more extensively mobilized by MNEs during the development phase to upgrade local suppliers’ technological capabilities through intentional and unintentional knowledge sharing, provision of training, ensuring improvements in the quality of raw materials and local suppliers’ productivity. Moreover, labor mobility and imitation spillover effects played an important role in local firms’ growth and capability upgrading. Institutional externalities associated with MNEs’ activities triggered the initiation of the industry’s professionalization. During the growth phase, the scope and scale of spillovers and externalities expanded further, supported the establishment of a viable local market, and created a distinctive industry identity that mimicked the Northern European one. These findings allow us to contextualize spillover impacts and highlight the importance of a long-term perspective when assessing them (Ascani and Gagliardi, 2020; Jones and Khanna, 2006).

Furthermore, this research shows that sustainability and safety practices based on international standards and certificates, a Nordic forest industry identity and MNE values were extensively diffused throughout the local industry over time. MNEs implemented the same standards for local industrial operations as for their home operations, which shaped local industrial institutional practices creating lock-in effects (Cantwell et al., 2010) and may have assisted in building positive attitudes toward MNEs. These types of outcomes were also discussed as important elements of the New Development Paradigm by Dunning and Fortanier (2007), and the present study empirically depicts their occurrences in the path of MNE-assisted development. This study finds that MNEs’ efforts resulted in local capability upgrading, industry professionalization and the diffusion of Nordic standards have supported MNEs’ long-term expansion. This manifests MNEs’ success in building recombinant location-bound FSA through cooperation with local actors (Collinson and Narula, 2014).

The study’s findings highlight the importance of MNEs’ initiatives in infrastructure upgrading and community development, which aided livelihoods in scarcely populated areas and contributed to easing possible tensions between MNEs and citizens over time. This extends previous research on how social pressures influence MNEs’ operations in host countries (Brammer et al., 2021). The MNEs’ actions that targeted enhancing rural communities’ employment, education and infrastructure were positively received by local stakeholders, which also informs the dialog about the positive and negative impacts of MNEs in host countries (Doh, 2019; Giuliani, 2019). The evolutionary perspective reveals that MNEs acted as key change agents in the local industry’s economic and social environment through close interactions with local actors. These social benefits from the forest sector’s growth may have been important in balancing the arguments arising from environmental movements against the effects of large plants on water quality and quantity.

To conclude, we uncovered the complexity behind MNE-led industrial development when – despite increasing the country’s GDP, improving employment levels and promoting infrastructure development – their operations raised environmental concerns regarding large-scale industrial production, regionalization-related issues concerning the substitution of land used for livestock production, and decreased biodiversity (Morales Olmos and Pienika, 2022). MNEs attempted to remedy these tensions by communicating and ensuring compliance with environmental standards (UPM Press Release, 2020), which highlights the role of technology in minimizing the environmental impacts of large-scale operations (Bento and Moreira, 2019).

7. Theoretical contributions

7.1 Contribution to the multinational enterprises development literature

This research enriches the dialogue on the mechanisms of MNEs’ impact on the industrial and social environments in developing economies (Jones and Khanna, 2006). By adopting a co-evolutionary lens, this study runs through real historical time rather than showing the outcomes at a snapshot of time (Cantwell et al., 2010; Gaddis, 2002). It reveals the nonlinear and somewhat messy long-term co-evolution path when MNEs and local actors experienced tensions and gradually expanded outcomes.

First, we contribute to the MNE-assisted development literature by showing the short-, medium- and long-term impacts of MNEs’ operations on the host country’s economic, industrial and social development (Zhan and Mirza, 2012). These impacts followed path dependency by gradually growing over time because of the expansion in interactions between MNEs and local actors and MNEs’ increased commitment to the host country’s operations. Foreign and local actors’ activities were interwoven, reinforcing one another and being supported by local responsiveness and a readiness for cooperation.

Second, our research extends knowledge about MNEs’ investment motivation (Narula, 2018). It illustrates MNEs’ ability to use several types of Oa advantages not only to achieve technology transfer but also to build social acceptance in the host country, referred to in earlier research as a social license (Narula, 2018), which we find to be important for MNEs’ long-term presence. Nonetheless, while MNEs’ activities expanded beyond business-related interactions and involved engagement with education, rural areas and infrastructure development, as well as environmentally related matters, some negative impacts remained.

Third, this study emphasizes the value of a historical approach for understanding the long-term positive and negative impacts of MNE-assisted development (Decker, 2022; Buckley, 2009). It extends the conversation about MNEs operations’ broad influence on developing countries, such as inequality and poverty implications (Doh, 2019). Recently, studies have made increasing efforts to grasp MNEs’ negative impacts on developing economies and highlighted their significance (Brandl et al., 2021; Giuliani, 2019). The present research empirically substantiates assumptions related to the positive and negative aspects of MNE-assisted growth within and beyond industry boundaries.

7.2 Contributions to the spillover literature

This study unveils how time and processes bring about different types of spillovers and linkages in a resource-intensive industry. We untangle complex matters attributable to context and time by following causality in the explanation of sequencing (Buckley, 2016), rather than simply reporting on spillover impact on firms’ productivity (Ascani and Gagliardi, 2020). We trace knowledge about how spillovers affected the evolutionary development of industry’s technology basis, activity networks, identity and market. These spillovers and linkages were supported by industry of economic growth and infrastructure and community development. We also illustrated that the impacts of linkages and spillovers occurred in a cumulative manner due local firms’ willingness and ability to cooperate, as well as support of institutional structures. While previous research on MNE development highlights the positive impact of local firms’ absorptive capacity, we inform this literature by showing how the co-evolution of the interactions between local firms and MNEs results in the occurrence of spillovers increasing over time in their scope and implications (Pierson, 2000). We also extend the theoretical discussion on MNE-assisted development and spillovers by conceptualizing the various impacts of spillovers and linkages over time on the industry’s development and placing them in broad economic and social contexts. This study stresses that a combination of MNEs’ economic, technological, infrastructure and community initiatives supported local actors’ willingness to respond to MNEs’ initiatives and engage in long-term cooperation. This highlights the salience of social and sustainability considerations for MNEs’ long-term operations and the importance of addressing negative impacts. Thus, we complement the spillover literature with our discussion about their implications for community, education and infrastructure development (Görg and Greenwood, 2002).

Our research findings underscore the importance of the temporal dimension and the value of the historical approach in assessing spillover impact (Buckley, 2016; Decker, 2022). While the limitations of such measures and the lack of accounting for interdependencies have been previously mentioned (Driffield and Jindra, 2012), little effort has been made to apply different approaches for studying spillovers and MNE development, particularly those capturing the process of how spillover effects occur over time (Paul and Feliciano-Cestero, 2021). Thus, our study makes a methodological contribution to the literature on spillovers by adopting a historical method for unraveling complex interdependencies and drawing long-term implications (Buckley, 2009).

7.3 Contributions to the industry emergence literature

First, by adopting an evolutionary approach, we capture the entire process of industry development from its initial to growth phase. We uncover how MNEs spillover mechanisms and externalities triggered the industry’s evolution, as determined by changes in four industry sub-processes. This encompassing view of industry emergence extends the fragmented knowledge of transitions between phases over time (Gustafsson et al., 2016). The developing economy context further provides empirical richness to the industry emergence literature and expands this field’s theoretical foundations.

Second, this study uncovers the dynamics occurring between organizations and the operational environment during the industry development process. The strategies of MNEs, local firms and local governments co-evolved with the institutional environment along path-dependent trajectories. This study’s framework views the industry’s development as a path-dependent evolving process that is economically assisted by specific foreign actors, in our case, developed-country MNEs. While the government initiated the process by establishing the forestry law, MNEs were both the main actors and the driving force in the local industry’s development from its inception. The role of MNEs has not previously been examined in discussions of industry emergence research. Thus, we extend the industry emergence literature by showing how developed-country MNEs shaped both the external market and the institutional environment as they expanded their operations in a developing economy in a path-dependent manner. While prior studies have focused on understanding how domestic factors, such as technology entrepreneurs (Garud and Karnøe, 2003), the emergence of new technologies (Hung and Chu, 2006) and community dynamics (Mezias and Kuperman, 2001), facilitate industry growth, our study examines the interactions between foreign and local firms and a developing economy’s institutional environment.

7.4 Practical and societal implications

This study draws MNE managers’ attention to the benefits of developing long-term strategies for engagement and cooperation with local business and societal stakeholders. Because of the complexity associated with large-scale industrial investments, the achievement of success in MNEs’ host country operations requires local input relying on not only local actors’ ability but also their willingness to cooperate. Furthermore, this study expands the understanding of local firms’ managers about the existence of a broad range of means of interactions with MNEs and their long-term outcomes occurring in a co-evolutionary path-dependent manner.

Next, the research makes policy contributions by highlighting path dependence in the realization of benefits from MNEs’ operations over a long period, thus suggesting the importance of a long-term horizon in policy planning and the assessment of its outcomes. This study highlights that the complexity of environmental and social issues stresses the need for systematic measures from the local government and local and foreign companies to support the achievement of MNE-assisted development goals. Governments should not only carefully plan how to attract investments but also cooperate with MNEs regarding how to maximize economic and societal benefits and mitigate the negative impacts of MNEs’ operations. As MNE operations have impacts within and beyond the industry, the local government appears to be the institution best equipped to create support mechanisms accounting for multiple stakeholders’ interests.

Finally, this study provides insights for societal stakeholders regarding the importance of leveraging MNEs’ resources to tackle environmental and industrial challenges associated with large-scale industrial operations. Furthermore, this study shows that societal stakeholders could impose pressures on MNEs to account for local communities and environmental considerations if MNEs aim to secure long-term investments. The responsiveness of MNEs to these issues would not only have important benefits for societal well-being and developing capabilities but would also support the long-term presence of MNEs and the transition toward sustainable MNE-assisted development.

Figures

Figure 1.

“Temporal bracketing”: evolution of Uruguay’s forest-based pulp industry

Figure 2.

Empirically based framework

Table 1.

Interview data

Source	Interviewees	Duration	Examples of topics discussed
Firm, A, local firm	1 interviewee	01:08:53	Firm’s development, development of forestry in Uruguay, rotation of workers and seasonality of the forest work, contracts
Firm, B, local firm	1 interviewee	01:29:07	Firm’s development, changes in safety and environmental issues, development of machinery and working habits, workers’ working conditions, firm’s role in Uruguayan’s forestry sector, MNE’s supervising work, cooperation with other local firms, problems related to finding workers, competition in silviculture, education provided by firm, forestry sector’s future in Uruguay
Firm, C, local firm	2 interviewees	00:45:10 00:54:20	Firm’s history, education of workers, machinery development, safety requirements, future of the firm, cooperation and competition between local firms, technology development
Firm, D, local firm	1 interviewee	01:22:33	Firm’s history, MNEs’ deals with landowners, cooperation with MNEs, professionalization of silviculture in Uruguay, contracts between local firms and MNEs, demands to increase efficiency, cooperation with the universities, sharing experience between local firms and MNEs, developing of technology, firm’s future
Firm, E, local firm	1 interviewee	00:58:10	Firm’s history, labor regulations, growth of firm’s opportunities, technology development, MNEs standards, future of the pulp industry in Uruguay, environmental matters
Firm, F, local firm	1 interviewee	00:52:50	Firm’s history, labor regulations, growth of firm’s opportunities, technology development, MNEs standards, future of the pulp industry in Uruguay, environmental matters
Firm, G and H, Local firms	1 interviewee	01:08:32	Firms’ history, machinery development, competition, contracts, growing of the firm, rotation of the workers, education, maintenance of the machines, professionalization, efficiency increase, support of the MNE, cooperation with other local firms, firms’ future, changes in quality of life, help of MNEs
Firm, I, local firm	1 interviewee	01:50:31	Firm’s history, contracts, economic risks, starting the firm with a help of MNE, relationship between local firms and MNE, training of workers, pressure from MNEs, competition between SMEs, challenges in forestry sector, rotation of the workers, changing of working culture, future of the silviculture in Uruguay
Firm, J, local firm	1 interviewee	01:12:04	Firm’s history, workers’ training, competition between local firms, investments, firm’s challenges, unions’ activities, environmental and safety standards of MNEs, contract negotiations with MNEs
Firm, K, L and M, local firm	1 interviewee	01:26:23	Firms’ history, business idea from MNE, MNE’s help in the beginning, maintenance of the machines, rotation of the workers, sharing knowledge with colleagues, sharing machinery and spare parts with other SMEs, competition between SMEs, contracts with MNEs, workers’ working conditions, MNEs organizing training, association work, firm’s future
Firm N, local firm	1 interviewee	01:43:00	Contractors’ associations in Uruguay, standards and requirements of MNEs, social aspects, firm’s history in Uruguay, problems to find qualified workers, profitability, fair competition, firm’s future
Firm O, local firm	1 interviewee	00:56:44	Firm’s history, idea to start own business, transportation, contracts with MNEs, safety requirements, pollution standards, cooperation with other local firms, investments, firm’s and forestry sector future
Firm P, local firm	1 interviewee	00:35:21	Firm’s history, status of pulp industry in Uruguay, land ownership changes, importance of the pulp industry for Uruguay
Firm, Q, local firm	1 interviewee	01:21:52	Idea for establishment of the firm, seasonality of the work, values of MNEs, unions, managing and hiring workers, training workers, cooperation with university, benchmarking the other companies from abroad, contractors related issues, safety standards, social aspects of MNEs and local firms, short duration of contracts
Firm, R, local firm	1 interviewee	00:55:28	Technological development, expansion possibilities of the business, competition between the local firms and the contracts with MNEs, improving the profitability, technical challenges
Firm, S, local firm	1 interviewee	01:21:45	History of Uruguay, assistance of MNE, Uruguayan plantation forestry, the lack of forestry major in university education, benchmarking and learning from abroad and large companies, technological development in forestry through agricultural machinery, cooperation with local firms and MNEs, contract issues
Firm, T, local firm	1 interviewee	00:59:02	Firm’s history, social aspects of the pulp business for Uruguay, technology and safety standards, working standards, environment protection, co-operation with local firms and universities, certificates, learning by doing, forestry research activities in Uruguay and abroad, technology development, pulp sector in Uruguay
Firm, U, local firm	1 interviewee	01:00:35	Firm’s establishment, growth of the business, different strategies of MNEs, forestry society, safety requirements, future of the firm
R&D organi-zation	1 interviewee	00:48:37	Interviewee’s career, pulp industry in Uruguay, university level forestry education, increase in health and safety standards, economic impact of pulp industry in Uruguay, public views on pulp industry in Uruguay, technological development, local development, innovations, cultural aspect of forestry in Uruguay, global challenges and competition in pulp industry
NGO	2 interviewees	01:11:23	Interviewees’ backgrounds, development of pulp industry in Uruguay, changes in land use, forestry law change, state’s and government’s role in the change, FSC certificate, environmental and biodiversity issues of plantations, environmental protection, exotic species, rural versus city areas, social needs and changes, long-term planning, risk management, sustainability, technological solutions
R&D organiza-tion	1 interviewee	01:26:15	Interviewees’ background, pulp industry in Uruguay, pulp industry supply chain model from Finland, infrastructure, increase of social services and jobs after MNEs’ entry, research and innovation actions, environmental issues, future of Forest industry in Uruguay
Governmental organi-zation	2 interviewees	00:49:05	Organization background, situation of pulp industry in Uruguay, importance of pulp as an export product, pulp industry’s importance as an employer, public opinion on pulp industry, development needs of education and research sectors, bioeconomy and bio-based economy, digitalization, certifications and environmental laws, conditions of workers and environment, global competition in sector, future of the pulp industry, chemical industry, development of infrastructure, forestry related research projects in Uruguay
R&D organi-zation	2 interviewees	01:31:04	Interviewees background, laboratory activities in Uruguay, cooperation with university, current situation of pulp industry in Uruguay, Forest law, development of the forest sector in the future, government’s role in development of forest sector, MNEs’ research, competition in Latin America, technological development, environmental aspects, lack of educated people, biotechnology, MNEs influence on social development, infrastructure
Industry expert	1 interviewee	01:11:45	Interviewees background, history of pulp industry in Uruguay, cooperation with other countries, environmental discussions in Uruguay, environmental standards, future situation of pulp industry in Uruguay, lack of forestry culture in Uruguay, union issues
MNE	1 interviewee	00:29:42	Plantations and pulp industry in Uruguay, the impact of the forestry activities, research supporting long-term development, circular economy and bioeconomy, future of Uruguay pulp industry and worldwide, cooperation between universities and research organizations, innovations, digital technology, global trends
R&D organi-zation	1 interviewee	01:28:40	Interviewee’s background, history of paper and pulp industry in Uruguay, Forest plantations, differences between forest industry in Uruguay and Finland, use of eucalyptus, future forest industry actions, possible new wood products, biorefinery possibilities, forestry education, cooperation between companies and institutions, sustainability aspects of forest industry and plantation forestry, lack of human resources, policy changes
Govern-mental organiza-tion	1 interviewee	00:41:14	Background of the Forest law, reasons to attract pulp industry to the country, actors in pulp industry, society views on pulp industry, legislation and policy related forestry and environment, markets
R&D organi-zation	1 interviewee	01:32:20	Organization background, actions related to pulp industry, history of pulp industry in Uruguay, pulp companies in Uruguay, pulp industry as a part of Uruguayan economy, free tax area, education on forestry, infrastructure, fast changes of the industry, rural challenges, high standards of pulp industry, safety and health standards, lack of innovations, environmental aspects and future situation, risks related to plantation forestry, bioeconomy
R&D organiza-tion	1 interviewee	01:34:56	Interviewee’s background, history of Forest industry in Uruguay, current situation of pulp industry in Uruguay, technology of the pulp industry, public view in the pulp industry, challenges and future of pulp industry, transportation costs, bureaucracy and standards
R&D organiza-tion	1 interviewee	00:57:02	Interviewee’s background, Uruguayan pulp industry, economic and environmental impacts of the Forest industry, opinion of society, competition of land use, agriculture, environmental issues, certificates, water issues, cooperation between research, university and industry, future of the sector, climate change

Source: Table by authors

Table 2.

Secondary data

Source of information	Content of data
UPM and Stora Enso press release archives for a period of 2013–2023	–  Operations of UPM and stora enso in Uruguay –  Reports about environmental and community matters
Scientific articles for a period of 1970–2023	–  Viewpoints and analysis about the forest-based pulp industry development during 1970–2023 –  Reflections on the legislation and government actions
Scientific books, doctoral dissertations, and master thesis publications for a period of 1970–2023	–  Viewpoints and critical analysis of the events over 1970–2023 –  Reflections on the legislation documents and actions
Magazines and news in the public media covering period of 1990–2023	Selected publication about UPM operations in Uruguay in Helsingin Sanomat and Yle Uutiset
Publications of dialogue earth https://dialogue.earth/en/ Change maker, Finland www.changemaker.fi European Forest insititute’s publications https://efi.int World reinforest movement (Latin America and Uruguya) www.wrm.org.uy Forest stewardship council international https://fsc.org/en	Independent viewpoints about forest-based pulp industry’s development, environmental and sustainability matters in Uruguay
Investment, export statistics, strategies and roadmaps, policy papers, reports	–  Facts reflecting the milestones of forest-based pulp industry’s development during 1970–2023 –  Forest-based pulp industry’s economic indicators, government reports and statistics

Source: Table by authors