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Journal Article

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

Journal of Economic Behavior & Organization, 94: 393-404

Authors

  • Godart
  • O.
  • Görg
  • H.

Publication Date

DOI

10.1016/j.jebo.2013.01.007

JEL Classification

F23 O12

Key Words

backward linkages

forced linkage

multinational customers

suppliers

Related Topics

Growth

Globalization

Foreign Direct Investments

Emerging Markets & Developing Countries

Companies

Germany

Europe

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.

Kiel Institute Experts

  • Olivier Godart, Ph.D.
    Director Advanced Studies Program (ASP)
  • Prof. Holger Görg, Ph.D.
    Research Director

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