Michael Crone

Local Sourcing by Multinational Enterprise Plants: Evidence from the UK Regions and the Implications for Policy:

New empirical evidence on local sourcing by multinational enterprise plants in two UK regions (Yorkshire and The Humber and Northern Ireland) is presented and compared with evidence from other UK regions. The proportion of material inputs sourced locally is generally quite low in both regions and is broadly in line with that observed elsewhere. The scope for increasing the level of local sourcing through policy intervention is then examined and the suitability of various policy models for the UK regions is considered. A number of obstacles to greater local sourcing are identified including the sourcing strategies employed by multinationals and problems of availability, capacity, and competitiveness in local supply bases. The scope for policy intervention, it is argued, is quite limited but supplier-development policies designed to tackle issues of supplier capacity and competitiveness have greater potential than simple ‘brokering’ services.

Knowledge Transfers from Multinational Plants in Ireland A Cross-Border Comparison of Supply-Chain Linkages

For regions or nations which historically have had low levels of domestic R&D investment - such as Ireland, North and South - inward investment represents a potentially important source of inward knowledge transfer. Using data from large multinational plants throughout Ireland, this paper examines the geography of knowledge within Irish manufacturing, focusing particularly on knowledge gaps and knowledge-transfer activity. The analysis suggests three main empirical results. First, no significant knowledge gaps exist between the Irish plants of multinational enterprises (MNEs) and international best practice. Second, larger knowledge gaps exist between MNE plants and their best local suppliers, suggesting the potential for local learning in the supply chain. Average knowledge gaps to suppliers also tend to be larger in the North. Third, there is no clear evidence that knowledge-transfer activity is more intensive where knowledge gaps are widest. In particular, developmental interaction between MNE plants and suppliers tends to be more common in the South. Our results suggest the potential benefit of policy measures both to increase knowledge-transfer activity along the supply chain and also to increase knowledge-transfer activity between companies which are not trading partners.

Stability and change in the supply chains of multinational plants: the managerial voice

High levels of stability over the five-year period 1991–96 are observed in the supply chains of plants in Yorkshire and Humberside in the UK owned by multinational enterprises (MNEs). Stability is explained by a lack of alternative suppliers, satisfaction with existing suppliers, perceived benefits derived from continuity, sunk costs in existing suppliers and managerial complacency. Where supply chain patterns have changed, changes are associated with changes in production, changes in supply chain strategy, or exogenous factors, such as heightened competition and changes in the geography of potential suppliers. High levels of stability in the geography of the supply chain provide a challenge to arguments that there is now a rapid process of globalisation within MNEs. Nevertheless, where change is taking place, MNEs are moving towards increased globalisation in their sourcing strategies rather than towards a deeper embeddedness in their host regions.

Exploring the influence of the national institutional environment on SME exporters: comparative evidence from Tajikistan and the Kyrgyz Republic

This chapter explores how the internationalization of indigenous SMEs from transition economies is influenced by the national (i.e., home country) institutional environment. Our study employs a comparative case study design and is based on original qualitative field research interviews with small business owners/managers and “expert informants” in two “less-developed” transition economies in Central Asia: Tajikistan and the Kyrgyz Republic. Our evidence unveils and illustrates how the formal institutional environment (defined as a combination of formal rules, laws, regulations and government policies) influences the export behavior and performance of indigenous SMEs in the cotton sector. We find that businesses in both countries are affected by certain formal institutions, and provide several illustrations of this. However, comparative analysis of the Tajik and Kyrgyz cases also points to some interesting contrasts between the two countries, which we attribute to the particular nature, pace and extent of the transition process in each country.