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 article presents an 80-year historical study of the evolution of a multinational company’s manufacturing network. The study is based on business transactions and semi-structured interviews with managers. Company milestones and evolutionary stages emerged from the analysis and two evolutionary characteristics were identified; capability exploration and capability exploitation denoting how the company increased its corporate knowledge and deployed it corporate wide. The output includes a new taxonomy of company transformation that describes how subsidiaries of modern multinationals influence corporate growth.International Journal of Business and Globalisation 11/2012; 9(3):275–310.
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ABSTRACT: We seek to provide a comprehensive operationalization of firm-specific variables that constitute multinational enterprise subsidiary entrepreneurial competencies. Towards this objective, we bring together notions from the fields of entrepreneurship and international business. Drawing on an empirical study of 260 subsidiaries located in the UK, we propose a comprehensive set of scales encompassing innovativeness, risk-taking, proactiveness, learning, intra-multinational networking, extra-multinational networking and autonomy; which capture distinct subsidiary entrepreneurial competencies at the subsidiary level. Research and managerial implications are discussed.Long Range Planning 01/2013; · 2.20 Impact Factor
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ABSTRACT: The study draws on survey evidence from 332 foreign subsidiaries in a developed (New Zealand) and a developing (Brazil) economy to examine the relationship of MNE subsidiary characteristics (age and size) to subsidiary strategic and operational autonomy. It is found that subsidiary age and size do not affect subsidiary strategic autonomy, but subsidiary size may affect subsidiary operational autonomy. It is concluded that subsidiary size affects subsidiary operational autonomy if the subsidiary has a local market focus. The study suggests that for multi-country studies the heterogeneity of headquarter-subsidiary relationship and subsidiary national context be considered.Journal of Transnational Management 01/2013; 18(3):219-241.