Multinational experience and the creation of linkages with local firms. Evidence from the electronics industry

The paper focuses on multinational companies' creation of linkages with local firms in the electronics industry. Evidence is drawn from a novel data-set, covering international operations of the top European and US electronics companies, over the 1984-1995 period. Econometric tests are provided to highlight how firms’ multinational experience, measured by the extent of their presence in foreign countries, affects cooperative agreements, as opposed to licensing and foreign direct investments. It is highlighted that multinationals' subsidiary accumulation has a positive and significant impact on collaborative linkages with local firms. This contrasts with the predictions of market entry literature, but is consistent with studies on spillovers of inward foreign direct investments. Some implications are drawn both for host economies, particularly LDCs, which are interested in increasing the benefit from multinational presence; and for transnational companies, whose competitiveness in the examined industry largely depends on the ability to develop extensive networks of international collaborations. JEL classification: F23, L22, O33