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Suppliers of Multinationals and the Forced Linkage Effect: Evidence from Firm Level Data

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  • Godart, Olivier

    ()
    (Kiel Institute for the World Economy)

  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

Abstract

Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a "forced linkage effect" from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier-customer relationship and when endogeneity concerns are taken into consideration.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7173.

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Length: 33 pages
Date of creation: Jan 2013
Date of revision:
Publication status: forthcoming in: Journal of Economic Behavior & Organization
Handle: RePEc:iza:izadps:dp7173

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Keywords: forced linkage; suppliers; multinational customers; backward linkages; productivity spillovers;

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References

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  1. Grossman, Gene M. & Helpman, Elhanan, 2004. "Managerial incentives and the international organization of production," Journal of International Economics, Elsevier, vol. 63(2), pages 237-262, July.
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Cited by:
  1. Holger Görg & Adnan Seric, 2013. "With a little help from my friends: Supplying to multinationals, buying from multinationals, and domestic firm performance," Kiel Working Papers 1867, Kiel Institute for the World Economy.

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