Tension between multinational enterprises and host country government partners : a spillover perspective in natural resource-rich developing economies

Abstract

This dissertation presents a novel theoretical framework that conceptualises the existence of tension between multinational enterprises (MNEs) and local firms, in particular host-country government partners (HGPs), and its mediating mechanisms with regard to the realisation of spillovers from inward foreign direct investment (FDI) in emerging and developing economies. The contributions are twofold: firstly it provides a better understanding of the potential strategies used by local firms to get and maximise benefits they obtain from spillovers of inward FDI; secondly, it contributes to the extant literature with novel theoretical constructs that conceptualise the abovementioned tension and its mediating mechanisms. An in-depth qualitative interview data analysis is used to support the findings and build up the proposed theoretical constructs. With regard to the potential causes that underpin the existence of tension in a spillover context, four main causes were identified, that closely relate to the dyadic contrasting objectives of MNEs profit maximisation and of local firms benefits maximisation. The newly proposed framework brings together three theoretical lenses – competitive tension, relational competition and network bargaining power – under the central theme of spillover perspective to build an overall powerful model of the interactions between MNEs, the host-country government and its local partners as well as domestic firms. The overarching and resulting model highlights the relational interaction, as opposed to purely transactional or rivalrous behaviour, between MNEs and local firms. It also shows use of bargaining influence by locals to align realised spillovers to the expectations of locals, both as spillover enhancing and tension relieving mediating mechanisms.