Small business performance in MNC suppliers' networks

PurposeThe aim of this paper is to analyse the influence of a multinational company (MNC) on its local supplier's network. In particular, how the MNC influences the performance of supplier as well as non‐supplier local companies.Design/methodology/approachThe paper studies a local productive system involved in the manufacturing of lighting systems for automobiles, and made up of small and medium sized companies and led by a single multinational corporation which contracts out to the local industry. The analysis includes both suppliers to the multinational as well as non‐suppliers.FindingsThe study shows how the existence of knowledge transfer influences productivity through the productive linkage established with local suppliers and their hiring of MNC former managers. Direct local suppliers experience higher productivity than do local suppliers from lower levels of the supply chain. Similarly, local suppliers hiring MNC former managers show higher productivity than those who have hired only local managers.Research limitations/implicationsOne of the limitations of this paper is the size of the population studied. This paper focuses on one local supplier's network, and it only shows a very local experience. Another limitation is the difficulty in measuring the intensity of every channel of knowledge transfer. Thus, in the case of direct suppliers, it is very difficult to separate the effects of the knowledge transfer derived from the productive link and the effects derived from workers' mobility.Originality/valueThis paper identifies the key factors that influence the performance of the knowledge transfer into multinational corporation suppliers' networks related with the productitivy of local companies.