Foreign direct investment and local linkages: An empirical investigation

■ This paper investigates the quantity and quality of indirect, transactional and collaborative linkages between foreign affiliates and domestic firms based in New Zealand. Seven clusters of affiliates are differentiated by linkage formation behaviour. ■ Only fourteen percent of affiliates actively engaged in a broad spectrum of linkages, including alliances. Thirty-nine percent appear limited to demonstration and competition effects. Researchers and policy makers should recognise FDI heterogeneity with regard to impact on domestic industries. ■ The results find competitive influence, levels of competition, motives for investment, business activity, technology transfer, age and ownership form are significantly associated with linkage clusters. © Gabler Verlag 2007.