The demonstration effect refers to the ability of a firm to engage in an upstream stage of the value chain in a host country.

Question

Quizplus · Accepted Answer

The demonstration effect refers to the impact that the presence of a multinational corporation may have on local firms, enabling them to learn new technologies, management techniques or practices. It does not refer to a firm's ability to engage in an upstream stage of the value chain in a host country.

The Demonstration Effect Refers to the Ability of a Firm