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

    Research output: Contribution to journalJournal articleResearchpeer-review


    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.
    Original languageEnglish
    JournalJournal of World Business
    Issue number4
    Pages (from-to)503-514
    Publication statusPublished - Oct 2013

    Cite this