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Subsidiary importance in the MNC: What role does internal embeddedness play?

Published on Apr 1, 2011in International Business Review3.64
· DOI :10.1016/j.ibusrev.2010.07.005
Mo Yamin17
Estimated H-index: 17
(University of Manchester),
Ulf Andersson32
Estimated H-index: 32
(CBS: Copenhagen Business School)
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Abstract
This paper addresses the issue of how a subsidiary's internal and external embeddedness interact in generating the importance of the subsidiary vis-a-vis the MNC as a whole. We take previous findings of the positive impact of external embeddedness on a subsidiary's importance as our starting point and consider two questions: (a) how does the internal embeddedness of a subsidiary affect its organisational importance, and (b) how do a subsidiary's internal and external embeddedness interact in generating organisational importance? We test hypotheses reflecting these questions on data from 97 foreign subsidiaries belonging to Swedish multinationals. We find that internal embeddedness is negatively related to a subsidiary's importance to product development but unrelated to its importance to production development. We also find that internal embeddedness dilutes the positive impact of external embeddedness on a subsidiary's importance to production development. We discuss the findings in the light of the extant literature and consider implications for future research and MNC managers.
  • References (56)
  • Citations (87)
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References56
Newest
Published on Jan 1, 2010in Journal of Management Studies5.84
Yulin Fang25
Estimated H-index: 25
(CityU: City University of Hong Kong),
Guoliang Frank Jiang5
Estimated H-index: 5
(UWO: University of Western Ontario)
+ 1 AuthorsPaul W. Beamish59
Estimated H-index: 59
(UWO: University of Western Ontario)
The impact of knowledge transfer on foreign subsidiary performance has been a major focus of research on knowledge management in multinational enterprises (MNEs). By integrating the knowledge-based view and the expatriation literature, this study examines the relationship between a multinational firm's knowledge (i.e. marketing and technological knowledge), its use of expatriates, and the performance of its foreign subsidiaries. We conceptualize that expatriates play a contingent role in facilit...
Published on Dec 1, 2009in Journal of International Management2.83
Devi R. Gnyawalị1
Estimated H-index: 1
(VT: Virginia Tech),
Manisha Singal12
Estimated H-index: 12
(VT: Virginia Tech),
Shaohua “Carolyn” Mu1
Estimated H-index: 1
(Baylor University)
While ties among subsidiaries--the key players of a MNC network--are a prerequisite for the formation of the network and the flow of knowledge within the organization, we know little about factors influencing the formation of such ties. By building on the literature on inter-firm networks and knowledge-based view of the firm, we develop a multi-level model consisting of subsidiary characteristics, dyadic dynamics, and salient contextual factors to explain the inter-subsidiary collaboration for k...
Published on Mar 1, 2009in Journal of Management Studies5.84
Carlos Garcia-Pont4
Estimated H-index: 4
(University of Navarra),
J. Ignacio Canales5
Estimated H-index: 5
(St And: University of St Andrews),
Fabrizio Noboa2
Estimated H-index: 2
This article develops the concept of internal subsidiary embeddedness as the canvas within which subsidiary strategy takes place. Developing an inductive model, we identify three hierarchical levels of embeddedness. The first level is operational embeddedness, which relates to interlocking day-to-day relations. The second level is capability embeddedness, which concerns the development of competitive capabilities for the multinational as a whole. The third level is strategic embeddedness, which ...
Published on Jun 1, 2008in Academy of Management Journal7.19
Cyril Bouquet11
Estimated H-index: 11
(York University),
Julian Birkinshaw52
Estimated H-index: 52
(LBS: London Business School)
This study investigates how foreign subsidiaries gain attention from corporate headquarters. Using detailed questionnaire and archival data on 283 subsidiaries of multinational enterprises, our analysis revealed three significant findings. First, attention decisions are partially based on the structural positions that subsidiary units occupy within a corporate system—their “weight.” Second, a subsidiary also has a “voice” of its own that it can use to attract attention. Third, the relationship b...
Published on Jan 1, 2008in Organization Science3.26
L. Felipe Monteiro6
Estimated H-index: 6
(LBS: London Business School),
Niklas Arvidsson9
Estimated H-index: 9
,
Julian Birkinshaw52
Estimated H-index: 52
(LBS: London Business School)
Applying a new theoretical and empirical approach to intrafirm knowledge transfers, this paper provides some initial insight to the little-researched phenomenon of why some subsidiaries are isolated from knowledge-transfer activities within the multinational corporation (MNC). Knowledge transfer is framed as a problemistic search process initiated by the recipient unit. We show that knowledge flows from units that are perceived to be highly capable to units that perceive themselves to be highly ...
Published on Sep 1, 2007in Journal of International Business Studies7.72
Ulf Andersson32
Estimated H-index: 32
(Uppsala University),
Mats Forsgren26
Estimated H-index: 26
(Uppsala University),
Ulf Holm21
Estimated H-index: 21
(Uppsala University)
In this paper, we argue that a fruitful approach to the analysis of inter-organisational power in multinational corporations (MNCs) is to model the organisation as a federation. In the federative MNC, the headquarters and the subsidiaries are involved in a perpetual bargaining process. Thus a crucial issue is what power bases are there that the different actors in the federative MNC can use to influence strategic decisions. In this paper, we focus on the power bases associated with the local bus...
Published on Dec 1, 2007in Journal of International Business Studies7.72
Charles Dhanaraj15
Estimated H-index: 15
(IU: Indiana University Bloomington)
It has long been recognized that controlling complex organizations like multinational enterprises (MNEs) is a multi-dimensional problem. Efficient organizational structures based on Coasian transaction costs often run afoul of individual or sub-unit goals, resulting in vertical conflicts between headquarters and subsidiaries (Nohria and Ghoshal, 1994). Further, horizontal competition among subsidiaries intent on promoting their own strategic agendas within the MNE results in internecine competit...
Published on Dec 1, 2005in Strategic Management Journal5.57
John Cantwell38
Estimated H-index: 38
(RU: Rutgers University),
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University)
The determinants of R&D intensity differ between subsidiaries in a multinational enterprise (MNE). Previous literature suggests that whether a subsidiary achieves a competence‐creating output mandate depends on the qualities of its location. R&D strategies in competence‐creating subsidiaries are supply‐driven while those in purely competence‐exploiting subsidiaries are demand‐driven. Using data on U.K. subsidiaries of non‐U.K. MNEs, we find that the level of subsidiary R&D depends on MNE group‐l...
Published on Nov 1, 2005in Organization Science3.26
Julian Birkinshaw52
Estimated H-index: 52
(LBS: London Business School),
Mats Lingblad1
Estimated H-index: 1
(Singapore Management University)
We develop a theoretical framework for a specific form of intrafirm competition, namely the extent of overlap between the charters of two or more units in a single organization. This phenomenon is commonly seen in large organizations, e.g., cases of two business units producing competing products, or two product development groups trying to solve the same technological problem, but the existing academic literature provides little insight into the forms intrafirm competition takes, or the conditi...
Published on Jan 1, 2005
Cecilia Pahlberg5
Estimated H-index: 5
,
Peter Thilenius9
Estimated H-index: 9
Seizing the opportunity often takes the key role in innovation, change and long-term success in business. The opportunity is, in that respect, something valuable occurring in the market which can be discovered and put to use by a company with the capability to do so. For a company, this means being active in the market and employing the entrepreneurial function to realize the opportunity and to change its operations accordingly. We argue that certain opportunity development can only be achieved ...
Cited By87
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Published on Sep 1, 2019in Journal of Business Research4.03
Ismail Gölgeci5
Estimated H-index: 5
,
Alberto Ferraris12
Estimated H-index: 12
+ 1 AuthorsShlomo Y. Tarba23
Estimated H-index: 23
Abstract While much research has been conducted on the link between embeddedness and innovation outcomes, less attention has been paid on how and when MNE subsidiaries can effectively leverage their internal embeddedness to achieve greater innovation performance. We hypothesize knowledge transfer as a mediating mechanism to channel the potential role of MNE subsidiaries' internal embeddedness in innovation performance. Moreover, we explore the moderating influences of external search depth and b...
Published on Jun 16, 2019in Asia Pacific Journal of Management2.74
Xufei Ma14
Estimated H-index: 14
(CityU: City University of Hong Kong),
Andrew Delios37
Estimated H-index: 37
(NUS: National University of Singapore),
Shu Yu (CityU: City University of Hong Kong)
Recent trends in the organization of multinational corporations (MNCs) in large emerging markets point to the (re)emergence of a host country headquarters (HCHQ) as a central structural element to the implementation of MNCs’ strategies in these countries. Yet, academic research on the strategy, structure and the organization of MNCs’ subsidiaries in a country has yet to account for this recent structural phenomenon. To help better understand this innovation in MNCs’ structural organization, we d...
Published on Apr 6, 2019
Zeeshan Asim , Shahryar Sorooshian9
Estimated H-index: 9
A supporting management discipline is an under researched phenomenon. A majority of firms’ operating capabilities relating to knowledge, innovation and technology management as a supporting management discipline. This paper reviews the literature in the research and development (R&D) domain to formulate qand propose a conceptual model which is influenced by capabilities relating to knowledge, innovation and technology management. We performed a systematic literature review in which a range of ar...
Published on Feb 1, 2019in Global Strategy Journal2.73
Donal O'Brien2
Estimated H-index: 2
(DCU: Dublin City University),
Pamela Sharkey Scott9
Estimated H-index: 9
(DCU: Dublin City University)
+ 2 AuthorsNa Fu (Trinity College, Dublin)
We use a microfoundations lens to challenge the assumption of a simple relationship between organizational-level context (subsidiary entrepreneurial orientation) and entrepreneurial outcomes (initiative realization). Drawing on middle manager and subsidiary literature we argue that the strategic activities of the subsidiary's central actor, the subsidiary CEO (referred to as the subsidiary manager), translates the benefits of subsidiary entrepreneurship for initiative realization. We test this m...
Published on Jan 1, 2019
Sina Mortazavi , Igor Laine + 2 AuthorsSuraksha Gupta11
Estimated H-index: 11
Inclusive innovation, a relatively new term emerging in the last decade, commonly refers to any innovation for poor and otherwise excluded members of society. Developing economies are particularly promising targets for this kind of innovation due to their institutional voids and the vast numbers of people living below the poverty line. This chapter introduces an integrative framework highlighting a range of factors relevant to multinationals seeking to foster inclusive innovation in developing e...
Published on Jan 1, 2019
Marlena Dzikowska2
Estimated H-index: 2
(Poznań University of Economics)
The chapter presents a model of the determinants of the functional responsibilities of subsidiaries. In particular, the chapter presents argumentation for the existence of a complex set of relationships between functional responsibilities of a subsidiary and the subsidiary’s pool of distinct capabilities, initiative, internal and external embeddedness, and supply environment. In sum, the proposed model sets out what we believe are the drivers of a subsidiary’s functional responsibilities in the ...
Published on Nov 29, 2018in International Journal of Emerging Markets
Sven Dahms3
Estimated H-index: 3
(JCU: James Cook University)
Purpose The purpose of this paper is to investigate the role of networks and autonomy in competence development of foreign-owned subsidiaries (FOS) located in Taiwan. Design/methodology/approach Survey data have been collected from FOS located in the mid-range emerging economy of Taiwan and analysed using structured equation modelling and fuzzy set qualitative comparative analysis (fsQCA) techniques. Findings The results show that decision-making autonomy and intra-organisational networks are im...
Published on Sep 3, 2018in Business Process Management Journal
Alberto Ferraris12
Estimated H-index: 12
(UNITO: University of Turin),
Filippo Monge3
Estimated H-index: 3
(UNITO: University of Turin),
Jens Mueller6
Estimated H-index: 6
(University of Waikato)
Purpose In several studies, it has been found that organizational performance is affected by ambidextrous IT capabilities. Nevertheless, business processes are essential to the value generation conversion of IT investment into performance. In the literature, this focus on the impact of IT capabilities at the business process level is still under investigated. So, the purpose of this paper is to test the effects of explorative and exploitative business process IT capabilities on business process ...
View next paperThe Strategic Impact of External Networks: Subsidiary Performance and Competence Development in the Multinational Corporation