Multinational enterprise acquisitions in emerging markets: linkage effects on local firms Online publication date: Wed, 27-Jan-2010
by Rebecca Firth, Pervez N. Ghauri
European J. of International Management (EJIM), Vol. 4, No. 1/2, 2010
Abstract: This study focuses on the linkages occurring between UK service multinationals and their local suppliers in China and Korea. We consider the effects of linkage formation on domestic firms. Data collection was undertaken over a three-year period whereby qualitative in-depth interviews were carried out with managers in the UK headquarter, the subsidiary and the 'linked' local firm in order to facilitate a multi-perspective approach. Results indicate that the factors which facilitate linkage formation are subsidiary-related variables, primarily the mode of entry, subsidiary autonomy, level of embeddedness and subsidiary role. The key contribution of this paper is to extend the literature on linkages to consider services whilst developing a relevant conceptual framework. Overall, our study confirms the extreme importance of the subsidiary in linkage formation and also how the externalities occurring from linkage formation may benefit local firms and subsequently aid local economic development as a whole.
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