Multinational Supply Chain Linkage
Observational StudyReview
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.
Picture this
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.
What the evidence says
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.
- Who was studied
- Small and medium enterprises (SMEs) across various supplier sectors in Costa Rica.
- How
- Quasi-experimental longitudinal study evaluating firm trajectories four years after supply chain integration.
What to do
Implement national match-making and procurement programs that connect small and medium enterprises directly as suppliers to multinational corporations operating within the host country.
From the source
"In Costa Rica, a quasi-experimental study found that after SMEs began supplying to multinational corporations, they were likely to employ more workers, sell more to other firms, and achieve higher productivity four years later."
Market Access: Connecting Firms and Entrepreneurs to Markets to Spur Business and Job Growth