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Article
Publication date: 6 July 2021

Fabienne Chedid, Canan Kocabasoglu-Hillmer and Jörg M. Ries

The importance of the supply network to firm performance is well documented. Until now, the firm and its suppliers have been conceptualized as single entities. Yet…

Abstract

Purpose

The importance of the supply network to firm performance is well documented. Until now, the firm and its suppliers have been conceptualized as single entities. Yet, multinational corporations (MNCs) are composed of a complex, geographically dispersed internal network of subsidiaries. The supply and internal networks are inherently linked. The purpose of this study is to investigate the impact of the interaction of these networks on firm-level financial performance.

Design/methodology/approach

Building on supply network, internal network and dual embeddedness research, the authors investigate the interaction of these networks using supply network data from FactSet and internal network data from Orbis. We assess the impact at the MNC level, using measures of firm-level financial performance, physical proximity between the two networks and geographic dispersion of the internal network.

Findings

The results show that the performance effect of physical proximity of the firm with its supply network is negatively moderated by the geographic dispersion of the firm's internal network. This effect can be traced back to the diminishing marginal profitability of a firm's assets. Moreover, the benefits of dual embeddedness to the individual subsidiary come at a cost at the firm-level due to the operational challenges of managing a complex subsidiary network.

Research limitations/implications

This study is the first to investigate the supply and internal networks of MNCs simultaneously.

Originality/value

The paper extends supply network literature by considering the internal network of the focal firm and its suppliers. This paper is one of the first studies that offer an understanding of the interaction between supply and internal networks of a focal firm and the effect on financial performance.

Details

International Journal of Operations & Production Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3577

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Book part
Publication date: 10 August 2016

Ulf Andersson, Suma Athreye and Georgios Batsakis

We argue that a foreign-based R&D subsidiary of a multinational enterprise (MNE) can potentially source knowledge from three diverse knowledge networks, namely (i…

Abstract

We argue that a foreign-based R&D subsidiary of a multinational enterprise (MNE) can potentially source knowledge from three diverse knowledge networks, namely (i) external knowledge network of the home country, (ii) external knowledge network of the host country, and (iii) internal (MNE) knowledge network. Drawing on the relative costs and benefits associated with the process of synergistic knowledge, this study examines whether a substitutive or a complementary relationship exists when two of the aforementioned networks collaborate in order to generate new knowledge at the subsidiary level. Our study’s sample is based on a survey questionnaire addressed to foreign-based R&D subsidiaries of Fortune 500 companies. We assess the existence of complementarity/substitutability using the “production function approach.” Our results indicate that a complementary relationship exists between external knowledge network of the host and the home country, as well as between external knowledge network of the host country and internal knowledge network. On the other hand, external knowledge network of the home country and internal knowledge network form a substitutive relationship. Our study offers a more comprehensive view of the diverse sources/knowledge networks that R&D subsidiaries are sourcing knowledge from when compared to existing research. We also specify and account for the costs/benefits involved in knowledge sourcing and thereby detect possible substitution/complementarity between different sources of knowledge. So far, there has been limited to nonexistent research into the diversity of knowledge networks of R&D subsidiaries and the examination of potential substitutabilities and complementarities. Hence our empirical study contributes to the development of this particular research stream.

Details

Perspectives on Headquarters-subsidiary Relationships in the Contemporary MNC
Type: Book
ISBN: 978-1-78635-370-2

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Book part
Publication date: 12 November 2010

Phillip C. Nell, Ulf Andersson and Bodo B. Schlegelmilch

Purpose – The purpose of this chapter is to develop a more fine-grained model of the relationship between multinational corporation (MNC) external embeddedness and…

Abstract

Purpose – The purpose of this chapter is to develop a more fine-grained model of the relationship between multinational corporation (MNC) external embeddedness and subsidiary contribution to firm-level competitive advantage.

Methodology/approach – We briefly review previous international management literature and show that the conception of MNC embeddedness in external networks is often simplistic. We develop the concept of the HQ–subsidiary dyad being externally embedded and derive propositions on how this more holistic concept of MNC embeddedness influences subsidiary contribution.

Findings – We argue that subsidiary contribution depends not only on the relational embeddedness dimension of the subsidiary but that there is a complex interplay between several embeddedness dimensions on multiple levels. We suggest that the much emphasized effect of subsidiary relational embeddedness might be contingent on the HQ's own relationships, and the structure of the overall network. We also develop propositions which show that subsidiary relational embeddedness mediates the relationship between overall network structure and subsidiary contribution.

Research limitations – For the sake of theoretical stringency, we keep other influencing factors such as MNC strategy and specific subsidiary mandates as constant.

Originality/value of the chapter – Subsidiaries are an important source of firm-level competitive advantage. Subsidiary resources have also been shown to develop to a large extent in relationships with external actors. Despite this importance, we argue that our understanding of how the MNC is embedded in external networks and how this in turn influences subsidiary contribution is limited. This chapter attempts to make a first step into filling this gap.

Details

Reshaping the Boundaries of the Firm in an Era of Global Interdependence
Type: Book
ISBN: 978-0-85724-088-0

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Book part
Publication date: 20 October 2011

Andreas Al-Laham and Suleika Bort

Purpose – This study explores subsidiaries' local network embeddedness and how it contributes to localised subsidiary innovation output from a social network perspective…

Abstract

Purpose – This study explores subsidiaries' local network embeddedness and how it contributes to localised subsidiary innovation output from a social network perspective. In particular, we are interested in analysing the consequences of local network density, diversity and, subsidiaries' network position on its innovation outcomes.

Design/methodology/approach – Data are derived from a longitudinal quantitative study of the entire R&D network within one of the largest life science cluster in Germany, the ‘BioRegion Rhein-Neckar-Dreieck’.

Findings – Our findings indicate that the size (density) of the local network has an inverted U-shaped effect on the innovation outcomes of MNC subsidiaries. Our findings further indicate that a strong brokerage position in the local network has a significant positive influence on the innovation output while a position in the core of the network has a significant negative effect on the innovation output.

Research implications – Our results shed new light on the relationship between local embeddedness, brokerage, the danger of overembeddedness and innovation output of MNC subsidiaries.

Details

Entrepreneurship in the Global Firm
Type: Book
ISBN: 978-1-78052-115-2

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Article
Publication date: 12 March 2018

Sari Laari-Salmela, Tuija Mainela, Elina Pernu and Vesa Puhakka

The purpose of this paper is to examine subsidiary positioning within the dynamic business networks in the context of multinational companies (MNCs). The research question…

Abstract

Purpose

The purpose of this paper is to examine subsidiary positioning within the dynamic business networks in the context of multinational companies (MNCs). The research question of the study is: How does the positioning of a subsidiary emerge through strategic practices in the dynamic business networks of an MNC?

Design/methodology/approach

The study relies on the IMP view on strategy with a focus on market positioning activity and the strategy-as-practice approach. Positioning is seen as a question of strategic practices in the interactive spheres of the subsidiaries. In the empirical part of the study, the authors examine the practices of a forest machine industry multinational through longitudinal interview and archival data on three of its sales subsidiaries in Sweden, Russia and the USA.

Findings

The study defines core tensions in subsidiary interactive spheres and the related strategic practices that shape the positioning of the subsidiaries. The study models the practice-based network positioning of MNC subsidiaries as a dynamic play of relationship tensions.

Originality/value

Prior research has focused either on the internal organizing of the MNCs or embeddedness of subsidiaries in their local environment. Less attention has been paid to the practices of positioning through which the subsidiaries deal with the inevitable tensions at the intersection of the internal and external networks.

Details

IMP Journal, vol. 12 no. 1
Type: Research Article
ISSN: 2059-1403

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Article
Publication date: 29 October 2018

Enrico Baraldi, Francesco Ciabuschi, Olof Lindahl, Andrea Perna and Gian Luca Gregori

The purpose of this paper is to explore two specific areas pertaining to industrial networks and international business (IB). First, the authors look at how business…

Abstract

Purpose

The purpose of this paper is to explore two specific areas pertaining to industrial networks and international business (IB). First, the authors look at how business relationships influence the internationalization in time, from the establishment of the first subsidiary in a foreign market to the following ones, and in space, that is, across different markets. Second, the authors investigate how an increasing external network dependence of subsidiaries in their internationalization may cause a detachment of a subsidiary from the mother company as its knowledge becomes insufficient to guide a subsidiary’s internationalization.

Design/methodology/approach

This paper utilizes an exploratory, longitudinal, single-case study of Loccioni – a manufacturer of measuring and automatic control systems for industrial customers – to illustrate the specific dynamics of the influences of industrial networks on the internationalization of subsidiaries.

Findings

The case study helps to elucidate the roles, entailing also free will and own initiative, of small suppliers’ subsidiaries which operate inside several global factories, and how “surfing” on many different global factories, by means of several local subsidiaries, actually supports these suppliers’ own international developments. This notion adds to our understanding of the global factory phenomenon a supplier focus that stresses how the role of suppliers is not merely that of being passive recipients of activities and directions from a focal orchestrating firm, but can also be that of initiative-takers themselves.

Originality/value

The paper contributes to the IMP tradition by providing a multi-layered and geographically more fine-grained view of the network embedding companies that operate on internationalized markets. This paper thereby sheds light on a less investigated area of research within the IMP tradition: the link between internationalization in different countries and the interconnectedness between the industrial networks spanning these countries. At the same time, this paper contributes to IB theories by showing how a late-internationalizing SME can enter highly international markets by “plugging into” several established “Global Factories” as a way to exploit further opportunities for international expansion.

Details

IMP Journal, vol. 12 no. 3
Type: Research Article
ISSN: 2059-1403

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Article
Publication date: 6 November 2019

Cigdem Baskici

Although there have been a considerable number of studies regarding subsidiary role typology in multinationals’ management literature, there appear to be few studies that…

Abstract

Purpose

Although there have been a considerable number of studies regarding subsidiary role typology in multinationals’ management literature, there appear to be few studies that consider knowledge-based role typology from the network-based perspective. The purpose of this study is to fill this gap and extend the study of Gupta and Govindarajan (1991). Thus, the study focuses on answering the following research question: Do subsidiaries have different roles in terms of knowledge flows within a multinational company (MNC)?

Design/methodology/approach

This empirical study has been carried out as an explorative single case study. An MNC with 15 foreign subsidiaries headquartered in Turkey, which operated in the manufacturing of household appliances and consumer electronics, has been selected as the case. Knowledge transfer is analyzed in this MNC from the network perspective.

Findings

Four role typologies are detected for subsidiaries of the MNC: collector transmitter, collector diffuser, converter transmitter and converter diffuser.

Research limitations/implications

Findings of this study are specific to this case. Testing the findings in a sample consisting of subsidiaries of MNCs producing transnational products may contribute to the generalizability of these roles.

Practical implications

This study offers potentially important findings for MNC managers to use. First, in this study, knowledge flows' route could be defined within MNCs’ dual network. Second, role typologies could inform MNC managers to design their MNCs’ knowledge network.

Originality/value

The suggested typologies are expected to more accurately define the roles of subsidiaries within contemporary MNCs which are accepted to be transformed from hierarchical structures to network-based organizations.

Details

Review of International Business and Strategy, vol. 29 no. 4
Type: Research Article
ISSN: 2059-6014

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Article
Publication date: 19 November 2004

Jane W. Lu and Paul W. Beamish

This paper explores the potential competitive advantages from the development of an internal network of subsidiaries and external network of alliances. Given the broad…

Abstract

This paper explores the potential competitive advantages from the development of an internal network of subsidiaries and external network of alliances. Given the broad scope and lack of systematic investigation in prior research, clinical field research was conducted in eleven Japanese subsidiaries in China. Our in‐depth interviews revealed that there are benefits and costs associated with the development of both subsidiary networks and alliance networks. While there are exploitation and exploration benefits from subsidiary network development, internationalizing firms (especially smaller firms) are subject to the liability of foreignness. Alliance network development is an effective way to mitigate this liability if internationalizing firms choose the right alliance strategy.

Details

Multinational Business Review, vol. 12 no. 3
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 5 June 2009

Jennie Sumelius

This paper seeks to examine the internal and external social networks in which subsidiary HR and general managers discuss HRM issues, and to explain how their involvement…

Abstract

Purpose

This paper seeks to examine the internal and external social networks in which subsidiary HR and general managers discuss HRM issues, and to explain how their involvement in these networks influences subsidiary HRM capabilities.

Design/methodology/approach

The data consist of qualitative interviews with 40 HR and general managers in 23 Nordic MNC subsidiaries in China.

Findings

Managers view their networks with other MNCs as being more important for developing their HRM capabilities than contact with peers in local domestic companies. Within the MNC global and regional networks were perceived as being especially useful.

Research limitations/implications

The interviews were conducted in Nordic MNC subsidiaries in Beijing and Shanghai. This could carry implications for the generalisability of the findings. Other limitations of the study are the sampling method and the interview language. MNCs establishing themselves in China should encourage involvement of HR and general managers in internal and external networks. External MNC networks appear to be particularly important sources of HRM knowledge and ideas. Internally more effort should be focused on helping HR managers improve their global networks.

Originality/value

The paper provides an in‐depth description of subsidiary managers' networks, responds to calls made for more research regarding the outcomes of social capital, and addresses the gap in previous research regarding the importance of how things are done in HRM.

Details

Personnel Review, vol. 38 no. 4
Type: Research Article
ISSN: 0048-3486

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Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination…

Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Details

Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

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