The Role of Dual Embeddedness in the Innovative Performance of MNE Subsidiaries: Evidence from Brazil

This paper explores variability across a set of subsidiaries in a given local context and the same industry in terms of innovative performance as an outcome of the manner and extent to which they embed within both corporate (internal) and local (external) counterparts. By drawing on fieldwork evidence of seven subsidiaries operating in Brazil (1996-2007) it was found that: (1) subsidiaries that were able to develop knowledge-intensive linkages with specific internal and external counterparts simultaneously and based on continually increased frequency and improved quality achieved higher innovative performance levels than subsidiaries that developed such linkages with limited frequency and unchanged quality over time; and (2) some counterparts and linkages were more effective than others in terms of contributing to the subsidiaries' innovative performance. By drawing on a novel approach that explores dual embeddedness and its impacts on differences across a set of subsidiaries in terms of innovative performance over time, this paper extends our understanding of embeddedness as part of strategic asset-seeking strategies. It also provides a basis to deepen the analysis of the nuances of multiple embeddedness and its implications for the subsidiary's competitive performance.

[1]  A. Zaheer,et al.  Bridging ties: a source of firm heterogeneity in competitive capabilities , 1999 .

[2]  Brent D. Beal,et al.  The Embeddedness of Organizations: Dialogue & Directions , 1999 .

[3]  J. Dunning.  Location and the multinational enterprise: A neglected factor? , 1998 .

[4]  J. Birkinshaw,et al.  Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance , 2005 .

[5]  Rajneesh Narula,et al.  Multinational Enterprises, Development and Globalization: Some Clarifications and a Research Agenda , 2010 .

[6]  P. Almeida,et al.  Subsidiaries and knowledge creation: the influence of the MNC and host country on innovation , 2004 .

[7]  Morten T. Hansen,et al.  The Search-Transfer Problem: The Role of Weak Ties in Sharing Knowledge across Organization Subunits , 1999 .

[8]  Kathleen M. Eisenhardt,et al.  DYNAMIC CAPABILITIES, WHAT ARE THEY? , 2000 .

[9]  Nick von Tunzelmann,et al.  Technological Capabilities and Global-Local Interactions: The Electronics Industry in Two Mexican Regions , 2008 .

[10]  R. Mudambi,et al.  Is Knowledge Power? Knowledge Flows, Subsidiary Power and Rent-Seeking within MNCs , 2004 .

[11]  R. Rasiah,et al.  Firms, Politics and Political Economy: Patterns of Subsidiary-Parent Linkages and Technological Capability-Building in Electronics Tnc Subsidiaries in Malaysia , 2013 .

[12]  P. Matthyssens,et al.  The Architecture of Multiple Case Study Research in International Business , 2004 .

[13]  Keith,et al.  Trade, Technology, and International Competitiveness , 1995 .

[14]  Catherine Welch,et al.  Handbook of qualitative research methods for international business , 2004 .

[15]  Daniel A. Levinthal,et al.  ABSORPTIVE CAPACITY: A NEW PERSPECTIVE ON LEARNING AND INNOVATION , 1990 .

[16]  E. Clark,et al.  Organization-Community Embeddedness: The Social Impact of Enterprise Restructuring in the Post-Communist Czech Republic , 1998 .

[17]  T. Jick.  Mixing Qualitative and Quantitative Methods: Triangulation in Action. , 1979 .

[18]  B. Uzzi,et al.  Knowledge spillover in corporate financing networks: embeddedness and the firm's debt performance , 2002 .

[19]  Stephen Tallman,et al.  Internationalization, Globalization, and Capability-Based Strategy , 2002 .

[20]  Mark S. Granovetter.  Economic Action and Social Structure: The Problem of Embeddedness , 1985, American Journal of Sociology.

[21]  Ulf R. Andersson,et al.  The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation , 2002 .

[22]  Martin Bell,et al.  Firms, politics and political economy: patterns of subsidiary-parent linkages and technological capacity-building in electronics TNC subsidiaries in Malaysia , 1999 .

[23]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[24]  Bodo B. Schlegelmilch,et al.  Learning from foreign subsidiaries: An empirical investigation of headquarters' benefits from reverse knowledge transfers , 2006 .

[25]  R. Gulati.  Alliances and networks , 1998 .

[26]  Walter Kuemmerle,et al.  Home base and knowledge management in international ventures , 2002 .

[27]  ZolloMaurizio,et al.  Deliberate Learning and the Evolution of Dynamic Capabilities , 2002 .

[28]  Robert Pearce,et al.  Decentralised R&D and strategic competitiveness: globalised approaches to generation and use of technology in multinational enterprises (MNEs) , 1999 .

[29]  Ulf R. Andersson,et al.  Balancing Subsidiary Influence in the Federative MNC , 2006 .

[30]  S. Collinson,et al.  The evolution of innovation capability in multinational enterprise subsidiaries: Dual network embeddedness and the divergence of subsidiary specialisation in Taiwan , 2012 .

[31]  John Cantwell,et al.  MNE competence‐creating subsidiary mandates , 2005 .

[32]  K. Pavitt.  Technologies, Products and Organization in the Innovating Firm: What Adam Smith Tells Us and Joseph Schumpeter Doesn't , 1998 .

[33]  Bjoern Jindra,et al.  Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages , 2012 .

[34]  A. Spadavecchia.  Managing the embedded multinational: a business network view , 2009 .

[35]  Rajneesh Narula,et al.  A novel approach to national technological accumulation and absorptive capacity: aggregating Cohen and Levinthal , 2002 .

[36]  Brian Uzzi,et al.  Relational Embeddedness and Learning: The Case of Bank Loan Managers and Their Clients , 2003, Manag. Sci..

[37]  Matthew B. Miles,et al.  Qualitative Data Analysis: An Expanded Sourcebook , 1994 .

[38]  Sten Jönsson.  Institutions and Organizations , 1997 .

[39]  S. Lall.  Technological capabilities and industrialization , 1992 .

[40]  S. Filippov,et al.  Foreign-owned subsidiaries: A neglected nexus between foreign direct investment, industrial and innovation policies , 2008 .

[41]  Simona Spedale,et al.  Preservation and Dissolution of the Target Firm's Embedded Ties in Acquisitions , 2006 .

[42]  Andrea L. Larson.  Network Dyads in Entrepreneurial Settings: A Study of the Governance of Exchange Relationships , 1992 .

[43]  Mark S. Granovetter.  The Strength of Weak Ties , 1973, American Journal of Sociology.

[44]  John Cantwell,et al.  Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy , 1999 .

[45]  J. I. Canales,et al.  Subsidiary Strategy: The Embeddedness Component , 2007 .

[46]  Catherine Welch,et al.  Interviewing in the Multinational Corporation: Challenges of the Organisational Context , 2004 .

[47]  Stephen Young,et al.  Centralization and autonomy: back to the future , 2004 .

[48]  Ulf R. Andersson,et al.  Balancing subsidiary influence in the federative MNC: a business network view , 2007 .

[49]  Paulo N. Figueiredo,et al.  Industrial Policy Changes and Firm-Level Technological Capability Development: Evidence from Northern Brazil , 2008 .

[50]  B. Uzzi,et al.  The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect , 1996 .

[51]  P. N. Figueiredo.  Technological Learning and Competitive Performance , 2001 .