MNE linkages in international business: A framework for analysis

Empirical research demonstrates backward, forward and collaborative linkages between foreign subsidiaries and firms in host economies can have a major impact on the success of the development of these firms’ capabilities and resources. However, there is insufficient conceptualisation of this phenomenon in the international business literature, which has either presented a list of determinants of the occurrence of inter-firm linkages without identifying underlying constructs, focused on aggregate impacts of specific types of linkages or explored individual firm case histories. Such approaches inhibit our understanding of linkages at the firm-level generally and how they impact both local and foreign participants, in particular. Drawing on insights from other disciplines, a framework for analysis and future research is developed in this paper. This framework identifies three underlying constructs that determine the efficacy of linkages. It is argued that potential for firm capability and resource development via foreign–local interaction depends on the scope, quantity and quality of linkages formed. This approach reinforces the notion that particular dimensions of linkages, such as type, depth or duration, cannot be considered in isolation. Further, the paper argues that the relative emphasis on linkage scope, quantity and quality will involve trade-offs between them and maintaining equilibrium between global and local considerations.