Multinational firms, global value chains and the organization of knowledge transfer

by Federica Saliola and Antonello Zanfei

Abstract: The paper combines insights from different streams of literature to develop a more comprehensive framework for the analysis of knowledge transfer via value chain relationships. The authors integrate the existing literature in three ways. First, they consider value chain relationships as a multi-facet process of interaction between buyers and suppliers, involving different modes of knowledge transmission and development. Second, they assess whether and to what extent value chain relationships are associated with the presence of multinationals and with their embeddedness in the host economy. Third, they take into account the capabilities of local firms to handle the technology as a factor influencing knowledge transfer through value chain relationships.
The analysis finds that knowledge intensive relationships are positively associated with the presence of global buyers in the local market, with the efforts of MNCs to adapt technology to local contexts, and with the technical capabilities of domestic firms. By contrast, the age of subsidiaries and the share of inputs purchased locally appear to increase the likelihood of value chain relationships with a lower technological.

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