Vertical Linkages Case Study

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This paper reviews about the research of Axele Giroud on MNEs Vertical Linkages: The Experience of Vietnam after Malaysia. Where it compares the activity done by multinationals in both Malaysia and Vietnam which influences potential for knowledge transfer between multinationals and suppliers in both Malaysia and Vietnam and the benefit impact. It also discuss about suggestion on avenues for Vietnam to maximise linkages from MNEs. Malaysia is chosen to compare with Vietnam because it experiences a long standing of Foreign Direct Investment (FDI) than Vietnam and it is neighbouring country which is a part of ASEAN.
Axele giroud discuss that linkages can be define as direct relationship established by firms. There is been a two linkages that created by MNEs , one is vertical and another one is horizontal which also has the same meaning of
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They help to create demand for the local firm and competitive through horizontal linkages.
Axele Giroud has comes out with 4 proposition for this research from the previous studies that factors related to the MNEs from the aspect of relationship, the different level of knowledge based on their locations, and the local suppliers capabilities.
1. There is potential for knowledge and technology transfer from foreign affiliates based in Malaysia and Vietnam to their local suppliers (Giroud, 2007).
2. The nature of the relationship between foreign affiliates and their suppliers changes over time (Giroud, 2007).
3. Because Vietnam is transition economy, there is a difference in the level of knowledge and technology transfer from MNEs depending on whether they are located in Malaysia or Vietnam (Giroud, 2007).
4. MNEs’ knowledge and technology transfer to local suppliers contribute to the improvement of local suppliers’ capabilities (Giroud,
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