n African Journal of Business and Economic Research - Power asymmetries and relationships between MNCs and local firms in Africa

Volume 3, Issue 2_3
  • ISSN : 1750-4554
  • E-ISSN: 1750-4562


This paper discusses the problem of power asymmetry of MNCs and the temptation that it carries for MNC managers to shift investment burdens to small local firms, lock them up in captive relationships and reneges on the contracts that they sign with them. The asset specific nature of the investments made by the small firms in order to satisfy the MNCs makes the losses that they incur rather devastating to them. These arguments have been illustrated with two cases of MNC outsourcing agreements with local firms in Ghana. The paper also discusses the implications of this misuse of power for relational governance mechanisms that small firms must put in place to deal with the MNCs.

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