Local development and embedded large firms

A classification of potential ties between large firms and local economies is proposed, first, by working on various sections of literature concerning multinational enterprises, subsidiaries and regional development. Then, building on a model of a dynamic local economy, i.e. the vital industrial district, a framework is sketched in which different combinations of linkages are put in relation to different pools and degrees of strength of social capital and other local factors. The main object of this paper is to present that framework and illustrate a proposition nested in it. The proposition is that involvement in knowledge exchange and institutional building, identifying ‘developmental embeddedness’, is more probable where and when the local factors are neither ‘too weak’ nor ‘too strong’, and contextual policies fostering the developmental role of large firm units are present.