Growing Global: Foreign Direct Investment and the Internationalization of Local Suppliers in Scotland

Abstract

The paper examines how the localization of multinationals can be linked to the globalization of local business networks, particularly whether domestic linkages with foreign subsidiaries can facilitate the internationalization of local suppliers. Detailed interviews were held with 16 suppliers and 8 foreign investors in both the Scottish oil-gas and electronics industries. The results highlight the importance to suppliers of 'piggy-backing' multinationals into new markets, but show its greater significance in the oil-gas industry. The paper concludes that piggy-backing is dependent on the strength and value of domestic links between suppliers and subsidiaries. Industry-specific factors determine the intensity of these linkages. The implications for such developments are being absorbed by planning and economic development policy-makers at regional and national levels, as supplier and investor development is increasingly being placed within a wider policy framework of cluster development.