The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro‐level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro‐level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm‐level survey conducted by UNIDO in 19 sub‐Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates.
This article uses firm-level data for 19 African countries to look at the link between domestic firms' business relationship with multinationals and their performance in terms of innovation and productivity. Quite uniquely, we also evaluate the importance of support received by the domestic firm, either from the government or the multinational business partner, for this link. Overall, our data analysis shows that for the average domestic firm, supplying to a foreign multinational in the country is positively associated with product innovation. Buying from a multinational is positively associated with labour productivity. These results are independent of any type of support from the government or multinationals. By contrast, we also find that domestic firms' process innovation activity is only positively associated with supplying a multinational if the firm also receives assistance from the government or multinational. Furthermore, we find that supplying a multinational is only positively associated with domestic firms' productivity if the firm received technology transfer from the multinational customers.Nous utilisons les données de 19 pays africains pour examiner le lien entre la relation d'affaires qu'ont les entreprises nationales avec les multinationales et leur degrès d'innovation ainsi que leur productivité. Nous évaluons également l'importance du soutien reçu par l'entreprise nationale, que ce soit de la part du gouvernement ou de l'entreprise multinationale partenaire. Dans l'ensemble, notre analyse des données montre que, pour l'entreprise nationale moyenne, le fait d'être le fournisseur d'une multinationale étrangère implantée dans le pays est associé à l'innovation des produits. Le fait d'acheter à une multinationale est associé à la productivité du travail. Ces résultats sont obtenus indépendemment de tout type de soutien gouvernemental ou des multinationales. En revanche, nous constatons aussi que l'innovation de procédé au sein des entreprises nationales n'est associée au fait d'être le fournisseur d'une multinationale que si l'entreprise reçoit également l'aide du gouvernement ou d'une multinationale. En outre, nous constatons qu'être fournisseur d'une multinationale n'est associé à la productivité des entreprises nationales que si l'entreprise a reçu le transfert de technologie des clients multinationaux.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.