Transfer of productive practices between Multinational Companies’ (MNCs) subsidiaries and local suppliers: the case of Sigma

Abstract

The aim of this study is to analyze the process of transfer of productive practices between multinational companies’ (MNCs) subsidiaries and local domestic suppliers. The literature on transfer of organizational practices has largely discussed the issue of implementation of organizational practices, but it has overlooked their internalization (institutionalization) at the recipient organization. The case of Sigma – a subsidiary of an Asian MNC of the electro-electronic sector installed in Manaus, Brazil – is discussed with reference to the model proposed by Kostova (1999). Results evidenced that productive practices are partially implemented, but they are not internalized. Two reasons explain the non-institutionalization of productive practices at the suppliers: (i) cognitive-normative incompatibility between Sigma and its suppliers, and (ii) the low level of trust and identity between both sides. The main contributions of this paper to the literature on transfer of organizational practices within the international context are: (i) to discuss the transfer of productive practices beyond the subsidiary-supplier dyad; (ii) to identify the role of both organizational and relational contexts for the institutionalization of productives practices at the suppliers; (iii) to evidence the cultural-cognitive feature of the inter-organizational transfer of productive practices.

Keywords:
Transfer; Productive practice; Multinational; Backward linkage