Fostering linkages between transnational corporations and small to medium-sized enterprises in Brazil

Abstract

When large Transnational Corporations (TNCs) enter a host country, consequent development of local Small and Medium Enterprises (SMEs) is expected. The public sector may play an important role by fostering Business Linkages (BL), by which TNCs establish purchasing relationships with local SMEs. This article was motivated by growing attention in literature to the interaction between economic development and the ability of companies to absorb and disseminate competences. Its purpose is to understand the role of public policy programs that promote BLs for development by: (a) analyzing actions and programs developed by public and private institutions to foster BL in Brazil; (b) discovering the participants' benefits from such actions and programs; and (c) identifying opportunities for public sector promotion of BL. The research design was a multiple case study which analyzed Supplier Development Projects in five Brazilian states. Results indicate that public policies may complement overall development as well as industrial policy, which is related to capacity building, stimulating technology transfer, and, more broadly, promoting a business friendly environment able to attract investment for development, calling for a regional and sub-regional approach for a country the size of Brazil.

Satisfaction of professionals of participating companies with the performance of supplier development programs

“…Since the mid-1990s, movements known generically as Supplier Development Programs or SDPs have been created in several states in Brazil. Such programs promote interaction between buying companies and their suppliers (Freitas, 2009;Botelho & Bourguignon, 2011), stimulating business generation through the development of supplier companies, this being a relevant issue, since a buyer is more likely to contact a supplier the higher their institutional quality (Lanzolla & Frankort, 2016).…”

“…These SDPs are maintained financially by large industrial companies, which are important buyers of diverse materials and services, and are primarily intended to qualify current and potential suppliers located in regions where such industries are installed, stimulating commercial transactions between these companies (Freitas, 2009;Botelho & Bourguignon, 2011). In the Brazilian scenario, the SDPs of three states stand out for the time of existence (Freitas, 2009): Espírito Santo, Maranhão and Pará, with the first State being the precursor.…”

“…Managers in general have already realized that the performance of suppliers has a direct impact on the performance of companies, affecting the way they meet the needs of their customers (Botelho & Bourguignon, 2011;Viana & Alencar, 2012). They also realized that critical analysis of suppliers increases the quality of products and services provided (Capioto et al, 2019).…”

“…The narrowing and maintenance of the relationship between buyer companies and their suppliers have already been flagged as essential factors for the competitiveness of companies (Cambra-Fierro & Polo-Redondo, 2008;Nagati & Rebolledo, 2013;Yawar & Seuring, 2018), being considered one of the most important aspects for the success of the companies (Gonçalo & Alencar, 2014). This perception has led an increasing number of companies to act, directly or indirectly, in the development of their suppliers (Botelho & Bourguignon, 2011;Nagati & Rebolledo, 2013) as a means of ensuring that these companies meet the contractor's supply requirements (Freitas, 2009). With the purpose of acting in the qualification of suppliers located in regions where large industrial enterprises are installed and stimulate commercial transactions between these companies, which are relevant buyers, and local suppliers, in several Brazilian states, developments known generically as Supplier Development Programs or SDPs were created (Freitas, 2009;Botelho & Bourguignon, 2011).…”

“…This perception has led an increasing number of companies to act, directly or indirectly, in the development of their suppliers (Botelho & Bourguignon, 2011;Nagati & Rebolledo, 2013) as a means of ensuring that these companies meet the contractor's supply requirements (Freitas, 2009). With the purpose of acting in the qualification of suppliers located in regions where large industrial enterprises are installed and stimulate commercial transactions between these companies, which are relevant buyers, and local suppliers, in several Brazilian states, developments known generically as Supplier Development Programs or SDPs were created (Freitas, 2009;Botelho & Bourguignon, 2011). The execution of qualification and incentive actions to form business links is only possible if there is trust (Yawar & Seuring, 2018), generating compromise and minimizing the risks in commercial transactions between buying and supplying companies (Marconatto, Estivalete, & Pedrozo, 2014).…”