Credible enticements : Can host governments tailor multinational firms' organizations to suit national objectives?

Abstract

This article discusses the impact of host government policy inconsistency on multinational corporations' relationships with local suppliers that benefit from public funding. Empirical findings suggest that such relationships suffer from transactions cost disadvantages, due to concerns that unexpected losses of funding may cause the suppliers to demand new contracts. The findings reflect statistical tests on a structural equation, latent variable model using data from a survey of 111 affiliates of MNCs operating in 36 countries.