Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness

Some scholars have argued that globalization will reduce the importance of local contexts. We argue instead that despite the increased frequency and intensity of interactions across local contexts, they continue to retain their distinctive differences. MNEs face growing challenges in managing the complexity of these interactions, because they must manage ‘multiple embeddedness’ across heterogeneous contexts at two levels. First, at the MNE level, they must organize their networks to exploit effectively both the differences and similarities of their multiple host locations. Second, at the subsidiary level, they must balance ‘internal’ embeddedness within the MNE network, with their ‘external’ embeddedness in the host milieu. Balancing the subsidiary's strategic role within the MNE with its local identity and its domestic linkages can sometimes represent a trade‐off. Multiple embeddedness thus creates both business opportunities and operational challenges, which are explored in this special issue.