Balancing the Trade-off Between Learning Prospects and Spillover Risks: MNC Subsidiaries' Vertical Linkage Patterns in Developed Countries

Alessandra Perri, Ulf Andersson, Phillip Christopher Nell, Grazia D. Santangelo

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    This paper investigates local vertical linkages of foreign subsidiaries and the dual role of such linkages as conduits for learning as well as potential channels for spillovers to competitors. On the basis of data from 97 subsidiaries, we analyze the quality of such linkages under varying levels of competition and subsidiary capabilities. Our theoretical development and the results from the analysis document a far more complex and dynamic relationship between levels of competition and MNCs’ local participation in knowledge intensive activities, i.e. learning and spillovers, than previous studies do. We find a curvilinear relationship between the extent of competitive pressure and the quality of local linkages confirming our argument of a trade-off between learning prospects and spillover risks. Furthermore, the level of subsidiary capabilities moderates this relationship.
    TidsskriftJournal of World Business
    Udgave nummer4
    Sider (fra-til)503-514
    StatusUdgivet - okt. 2013


    • Competitive pressure
    • Learning
    • Quality of local vertical linkages
    • spill overs
    • subsidiary capabilities