functional linkage

The link between industries, like headlight manufacturers and car makers, or between an industry and the public. A firm's linkages are classified by their direction of movement: backward or input linkages are received by the firm; forward linkages are supplied by it to another undertaking. Links include information, components, raw materials, finished goods, and transport links. They create the chains which bind firms together so that the difficulties faced by one firm may have severe repercussions on others. Functional linkages are at the heart of agglomeration economies.