The local institutional context of vertical spillovers: The case of the Turkish automotive industry

In this thesis, the productivity, innovativeness and internationalization spillovers (vertical spillovers) arising from the buyer-supplier relations established between foreign owned main industry organizations and local supplier organizations in the Turkish automotive industry are tried to be explained within the framework of the dynamics of the host country local context and local organizations from the point of view of institutional theory. The study focuses on local supplier organizations that represent one of the parties of backward vertical foreign direct investment (FDI) spillovers. FDI spillovers represent an important external resource for developing countries and their organizations to access the knowledge and technologies they need. When the literature on FDI spillovers is evaluated in general, it is seen that the institutional environment that shapes the structures and strategies of organizations, and even the cooperation patterns among organizations are ignored. It turns out that the limited number of studies that try to explain FDI spillovers centered on the institutional environment generally focus on regulatory environment elements, but the normative and cognitive dimensions of institutions have not been studied sufficiently. In this study, it is aimed to contribute to the literature by filling the above-mentioned gaps by means of focusing on both the home country and various components of the home country institutional context. This study is based on multiple case studies, which is one of the qualitative research designs, and semi-structured interviews, secondary data and observation notes conducted with seven local automotive supplier organizations determined by purposive sampling strategy constitute the data set of the research. The obtained data were analysed using content analysis and a total of 26 codes that emerge as a result of the analysis are investigated under seven themes. The findings show that the institutional environment elements of standards; university-industry collaborations; support of government institutions; owner-manager company structuring; supply relations context; awareness, motivation, and cognitive capacity; and multiple normative pressures have significant implications for local organizations to absorb the potential spillovers of efficiency, innovation, and internationalization that may arise through valuable technological and managerial knowledge provided by FDIs to the local context of the host country. These institutional environmental conditions, which also represent the themes of the research, significantly direct local organizations through various regulatory, normative, and cognitive mechanisms in capturing the positive productivity, innovativeness, and internationalization effects resulting from FDI spillovers by both encouraging and restricting them. Keywords: FDI Spillovers, New Institutional Theory, Turkish Automotive Industry.