Foreign and domestic multinationals’ linkages in advanced, small open economies: do foreignness, regional origin and technological capability matter?
ISSN: 1525-383X
Article publication date: 31 May 2022
Issue publication date: 27 October 2022
Abstract
Purpose
International business theory suggests that multinational enterprises (MNEs) seek to internalise resources embedded in local firms to complement their own through inter-organisational relationships, yet little is known about whether and how these business linkages differ between foreign (F)MNEs and domestic (D)MNEs. This paper aims to explore the linkage differential between DMNEs and FMNEs operating in the same single-country contexts and to examine whether foreignness, regional origin and technological capability make a difference.
Design/methodology/approach
This study is based on a unique firm-level data set of 292 MNEs located in five advanced, small open economies (SMOPECs). This study analyses the benefit received – in the form of technical and organisational resources and knowledge – by DMNEs and FMNEs via backward, forward and collaborative linkages with local business partners.
Findings
Our research finds FMNEs benefit less from linkages than DMNEs; and FMNEs originating from outside the region especially so. However, the results also show technological capability mitigates this difference and is thus a game changer for FMNEs from outside the region.
Originality/value
This paper differentiates between FMNEs and DMNEs in their propensity to benefit from resources received from different local partners and explores the influence of regional origin and technological capability. Despite the advanced and internationally oriented nature of SMOPECs, DMNEs still gain more benefit, suggesting either liabilities of foreignness and outsidership persist, or FMNEs do not desire, need or nurture local linkages.
Keywords
Acknowledgements
The authors would like to thank the anonymous reviewers and the editor of MBR, Chang Hoon Oh for their constructive feedback and suggestions. Authors are also thankful for feedback received from reviewers and sessions chairs during the ATLAS 2021 conference and the ANZIBA 2020 conference. The authors would also like to acknowledge the assistance of Fabienne Fortanier with the design of the survey and collection of the data in the Netherlands and Belgium, Zhaleh Najafi-Tavani for support in data collection in Ireland and Singapore. Authors are also grateful for grants from Aalto University and Victoria University of Wellington that helped fund data collection.
Citation
Scott-Kennel, J., Giroud, A. and Saittakari, I. (2022), "Foreign and domestic multinationals’ linkages in advanced, small open economies: do foreignness, regional origin and technological capability matter?", Multinational Business Review, Vol. 30 No. 4, pp. 573-598. https://doi.org/10.1108/MBR-05-2021-0062
Publisher
:Emerald Publishing Limited
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