This project seeks to understand how multinational enterprise (MNE) investment into a developing country affects indigenous firms operating in the same industry. Critics of globalization have drawn attention to the potential negative impact of MNE investment on indigenous firms. For instance, MNEs can pose strong competition, appropriate scarce resources, and offer employment alternatives to individuals who would otherwise found their own businesses. MNEs can, however, benefit firms in the same industry. For example, MNEs may strength the local supply infrastructure, expose local managers to new technologies and work practices, or train employees who eventually move to local companies. This project begins with the premise that MNE investments have both positive and negative impacts on indigenous firms in the same industry. The project seeks to understand how the characteristics and strategies of MNEs influence the degree to which positive and negative effects occur.
The project includes a large-scale survey of MNEs and indigenous firms operating in Ghana. Additionally, in-person interviews of MNE managers, owners and managers of indigenous firms, and policy makers in Ghana will be undertaken in order to both put statistical results into perspective and develop materials to be disseminated for educational purposes. An understanding of the likely impacts of an MNE's investment, as well as the mechanisms by which positive and negative effects are most likely to occur, will assist developing countries' policy makers in their efforts to lure foreign investment, give MNE managers greater insight into the impact of their activities on host countries, and help managers of indigenous firms better respond to MNE entry.
