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The laws of attraction: What attracts innovative start-up firms to partnerships with global MNCs?

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Abstract

This paper explores the factors that drive small, globally oriented start-up firms in choosing one global multinational corporation (MNC) partner over another. Drawing upon value-added theory, it argues that start-up firms choose their global MNC partners in response to the added-value offered by MNC constellations. Based on a synthesis of the literature and a multiple case study of 14 software firms, the paper proposes that small, globally oriented start-ups base this choice on expectations of capturing value directly in the form of direct financial returns and indirectly by accessing the MNC’s market reach, reputation, and technology leadership domains.

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Notes

  1. The emphasis on entrepreneurship and value creation and appropriation opportunities does not diminish the importance of alternative perspectives on partnering between start-ups and MNCs, such as the resource-based view (Barney 1991) and transaction cost analysis (Williamson 1991). Indeed, start-ups may engage in entrepreneurial activities with respect to partnering with MNCs to overcome the limitations of their resources, to capture financial returns on their valuable and unique resources or capabilities and to leverage the resources in non-traditional ways. Conversely, the transaction cost perspective suggests that it is more effective for a small start-up to confront the markets with the assistance of one big partner handling a large number of transactions than to engage in those transactions by itself.

  2. The pilot respondent was a CEO from a Finnish software firm that has rapidly globalized through partnerships with leading MNCs, so his context is similar to that of the case firms and hence his validation can be considered appropriate to the context of this study.

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  1. Aalto University School of Economics, Katiskakuja 2B6, FIN-02230, Espoo, Finland

    T. J. Vapola

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Vapola, T.J. The laws of attraction: What attracts innovative start-up firms to partnerships with global MNCs?. J Int Entrep 9, 39–61 (2011). https://doi.org/10.1007/s10843-010-0068-4

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