Key local factors, supplier and linkage effectiveness: Evidence from the upstream petroleum sector of Ghana

Abstract

This paper examines the role of the key local factors, local supplier effectiveness on local linkage effectiveness to support local content requirements, in-country spending and value retention. Drawing on extant literature and linkage and spill-over effect theory, this study developed a conceptual framework and measurement items, which were validated by 205 responses from randomly sampled upstream petroleum firms supplemented with key informant interviews. Quantitative data was analysed using PLS-SEM with the help of SmartPLS3. Overall, all the results suggest highly satisfactory model fit. Furthermore, the results confirmed a statistically significant positive direct relationship between the key local factors and local linkage factors (0.573), key local factors and supplier effectiveness (0.699), supplier effectiveness and local linkage factors (0.369) and, indirectly, the key local factors impact local linkage factors via local supplier effectiveness (0.258). The policy and management implications of the findings are well noted, while further research is proposed based on the limitation of this study.