Upgrading against the odds: how peripheral regions can attract global lead firms

Building linkages with global lead firms, called strategic coupling, can be an effective way for emerging economies to upgrade into higher-level market capabilities. However, strategic coupling can be very difficult in particular for peripheral regions, which typically lack the size, skilled labor, and industrial experience to attract and retain lead firms. Sinos Valley in Brazil is an example of a peripheral region experiencing such challenges in the past, including global client switching to lower-cost locations and brain drain to metropolitan areas. Analyzing Sinos Valley’s latest upgrading efforts in the semiconductor industry, we show how local governance actors, including governments, universities, and firms, have jointly managed to lower these risks by building relational specificity with Korean partner organizations. Specifically, they engaged in a multi-layered process of (1) building exchange relations with Korean partners at the government, firm, and university levels; (2) setting up multi-local firm–university linkages; and (3) aligning these linkages with career paths. These alignments helped attract and retain talent by connecting degree and exchange programs with internships and entry-level jobs. Findings demonstrate how peripheral regions can learn to mitigate their disadvantages in upgrading through transnational infrastructures that extend the regions’ capacity to attract talent and firm investments.