Multinational Supply Chain Linkage

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In Simple Words

Picture a small local auto repair shop being hired as the official maintenance provider for a multinational delivery company. To fulfill the large contract, the shop upgrades its diagnostic tools, hires specialized mechanics, and adopts modern inventory management, which then enables the shop to attract additional high-paying corporate clients across the country.

Costa Rican firms starting multinational supply

Year before first multinational sale
Employment reference year
Four years after first sale
More employees

Nonrandom event study, adjusted using never and differently timed suppliers. Employment is relative to the year before first sale, not a raw before-and-after effect.

See source →Study conditions — Alfaro-Urena and colleagues, 2022 ↗

Research question

Small and medium enterprises in low- and middle-income countries struggle with low productivity, limited workforce growth, and restricted customer reach when operating in isolation. They lack linkages to large-volume corporate buyers that drive organizational scaling and operational spillovers.

Participants

Small and medium enterprises (SMEs) across various supplier sectors in Costa Rica.

Study Design

Quasi-experimental longitudinal study evaluating firm trajectories four years after supply chain integration.

Results

Four years after becoming suppliers to multinational corporations, SMEs were significantly more likely to employ more workers, expand sales to non-multinational buyers, and achieve higher total factor productivity.

Takeaway

Implement national match-making and procurement programs that connect small and medium enterprises directly as suppliers to multinational corporations operating within the host country.

Source and citation

See source →

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