Subsidiary embeddedness and control in the multinational corporation
ABSTRACT A subsidiary of a multinational corporation (MNC) is embedded in a network of specific business relationships. It is argued that the degree of subsidiary embeddedness is a function of the adaptation between the subsidiary and direct and indirect counterparts of these relationships. The paper hypothesizes that the higher the degree of embeddedness, the greater the likelihood of counterparts influencing the subsidiary's behaviour. This influence competes with headquarter's desire to exercise control to integrate the subsidiary into the overall corporate strategy.The empirical data presented, collected from 78 subsidiaries of major Swedish MNCs, indicate that embeddedness has an impact on how headquarter's control is perceived by the subsidiary, if embeddedness is separated into external and corporate embeddedness. The test provides support for the opinion that the higher the degree of embeddedness vis-à-vis external customers, suppliers and other counterparts, the lower the degree of headquarters' control, as perceived by the subsidiary. But it also lends support for the view that embeddedness vis-à-vis corporate counterparts works in the opposite direction; it rather tends to increase the control perceived at the subsidiary level. These results indicate that competition for influence over the subsidiaries' behaviour, as seen from the headquarter's point of view, arises primarily from external actors who have business specific relationships with the subsidiary.
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ABSTRACT: This paper explores buyer-supplier relationships (BSR) in the automotive and component industries. More specifically, it investigates the collaborative business relationships between a Portuguese based subsidiary of a major American automotive manufacturer and its Portuguese based direct suppliers (PBDS). This paper attempts to capture the extent of collaboration in the dyadic business relationships (DBR) involved, and to identify the factors that influence the establishment and development of collaboration in these DBR. In particular, the network of external relationships a subsidiary company has with its direct suppliers is investigated and conclusions drawn. A qualitative approach is favoured and a single case study is used. The research approach is cross-sectional in design and is descriptive and exploratory. This paper demonstrates a number of results: (1) the dyadic level of analysis is a necessary, but not sufficient unit of analysis to understand buyer-supplier relationships; (2) collaboration cannot be assumed to take place 'naturally', but it becomes another managerial choice; (3) collaboration is contingent on the position, role and influence level at different points in the network; (4) if the collaboration effort is not well targeted, performance levels will be impacted, and (5) at the dyadic level, performance improvement may be more dependent on the MNC network interactions than on the locally permitted activity.
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ABSTRACT: We investigate innovative performance of subsidiaries in multinational enterprises (MNEs) in China from an external local embeddedness perspective. We draw from prior research on subsidiary embeddedness and use social exchange theory (SET) to develop hypotheses relating to how trust with local partners and learning from local partners will impact innovative performance of MNE subsidiaries in China. Given the nature of the Chinese context, we argue that innovative performance will be positively influenced by trusting relationships with local external partners regardless of the location of the subsidiary in China. On the other hand, we argue that the role that learning from local partners plays on subsidiary innovative performance is location-specific, being dependent on the degree to which the location supports an innovative, knowledge economy. In addition, we hypothesize a location-specific interaction effect between trust and local learning. Using data from a survey of 306 MNE subsidiary managers in three tier-1 locations in China (Beijing, Shanghai, and Guangzhou) we find strong support for our hypotheses, and identify the strongest interaction effect between trust and local learning in Beijing.Asia Pacific Journal of Management 12/2014; 31(4):973-996. DOI:10.1007/s10490-014-9390-z · 3.06 Impact Factor
Asian Journal of Technology Innovation 05/2014; 22(1):33-53. DOI:10.1080/19761597.2014.905232 · 0.30 Impact Factor