The role of local content requirements in driving long-term supplier competitiveness through MNCs’ participation in the UAE oil and gas industry

Purpose This study aims to examine the impact of local content requirements (LCRs) on multinational corporations (MNCs) participation, technology spillovers (TSs) and supplier innovation in promoting supplier competitiveness in the United Arab Emirates (UAE) oil and gas industry. It studies the mediating role of TSs and the moderating effect of firm size across manufacturing and service sectors. Design/methodology/approach A quantitative approach was used by surveying 462 UAE oil and gas suppliers certified under the In-Country Value program. The relationships between LCRs, MNC participation, TSs, supplier innovation and competitiveness were validated using structural equation modelling. Findings Results confirm that LCRs enhance MNC participation which leads to TSs that promote supplier innovation. TSs mediate the relationship between MNC participation and supplier innovation. The effects are moderated by firm size; larger manufacturers benefit more from MNC relationships than larger service providers. While regulatory requirements drive localization, long-term competitiveness depends on the ability of firms to internalize and apply external resources. Practical implications The findings present implications for policymakers and business leaders in the oil and gas industry of the UAE. Competitiveness will be driven by incentivizing innovation at the supplier-level through R&D programs, incubation centres and targeted funding for SMEs. Apart from compliance, MNCs must participate in supplier development initiatives and local firms must develop absorptive skills to maximize spillovers from modern technology. Originality/value Research outcomes show an important contribution toward the role of LCRs in supplier competitiveness. In addition, this study helps close a research gap by focusing on the UAE, a resource-rich emerging economy where LCRs are a central pillar of industrial localization. The paper also contributes to theoretical discussion by integrating the resource-based view, institutional theory and dynamic capabilities theory. It shows that while LCRs function as external enablers, their effectiveness is not automatic. Rather, it is contingent on the absorptive and adaptive capacities of local firms.