Working Paper: CEPR ID: DP9324
Authors: Olivier Godart; Holger Görg
Abstract: Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a ?forced linkage effect? from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier- customer relationship and when endogeneity concerns are taken into consideration.
Keywords: Backward Linkages; Forced Linkage; Multinational Customers; Productivity Spillovers; Suppliers
JEL Codes: F23; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Supplier pressure from multinationals (F23) | Higher productivity growth (O49) |
| Coercive relationship with multinational customers (L14) | Higher productivity growth (O49) |
| Forced linkage effect (F16) | Higher productivity growth (O49) |
| Customer pressure (D12) | Higher productivity growth (O49) |
| Supplier status and customer pressure interaction (L14) | Higher productivity growth (O49) |