Transnational Corporations, Institutional Change, and Economic Development: An Institutional Learning Model for Development

The paper examines the role transnational corporations (TNCs) can play as boundary spanners supporting institutional change and policy transfer. Interactions between transnational investors and locationally bound actors increasingly give shape to the shifting geography of economic power and can lead to fundamental and persistent changes in the government, governance, and institutions that influence the character and potential of places. Historical context, path-dependency, power dynamics, and exogenous shocks all influence the formation and fungibility of the institutional matrices that influence prospects for economic growth. This paper examines the processes of institutional change by examining the lived experience of institutions—interactions of specific organizations in context—to shed light on how institutions shape development and how institutions themselves are shaped. A viable TNC acting as boundary spanner will enable learning through legitimate peripheral participation and encourage locationally bound actors to work together with industry toward clearly articulated goals. This study focuses on Intel Corporation's investments in Chengdu, China and the Ho Chi Minh City region of Vietnam. Through multiple interviews over the course of five years, it explores how the corporation pushed for changes to organizations, norms and ways of working in higher education and in economic development organizations, both major determinants of an economic institutional environment. In economic development organizations, Intel encouraged increased accountability and acculturated government officials to the demands and vocabulary of engagement with the global economy. In higher education organizations, mutual articulation of clear learning outcomes and linkages with peer higher-education entities in other countries were among Intel's key contributions.