Multinational experience and the creation of linkages with local firms: evidence from the electronics industry

This 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 period 1984-95. 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 transaction cost view underlying most market-entry literature, but is consistent with a dynamic efficiency perspective which emphasises the role of linkages in learning and knowledge accumulation and exploitation.