MNCs and linkages creation: Evidence from a peripheral area

MNCs’ spillovers occur in the local economy through linkages creation, but little it is known so far on the factors affecting the creation of some linkages rather than others by foreign investors. Adopting as a spatial unit of analysis a peripheral sub-national subregional area so far little examined by current IB developmental literature, this study investigates how foreign subsidiaries’ local market strategy and organizational structure impact on local linkages creation. Given the number of features shared by the peripheral sub-national sub-regional area under analysis with less developed economies, broader policy implications are drawn for local economic development in less developed countries. Using original survey data, we find that linkages creation is greater when foreign investors entertain market rival relationships with other foreign units and have a competence-creating scope within the corporate organizational structure. The phenomenon also occurs, although to a lesser extent, when foreign investors with a competence exploiting scope do not compete with other foreign units. Conversely, no linkages are established by rival competence-exploiting subsidiaries.