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Subsidiary Embeddedness is a Strategic Choice: Complementarity and the factors associated with different types of embeddedness

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  • Suma Athreye
  • Georgios Batsakis
  • Satwinder Singh

Abstract

We conjecture that the Research and Development (R&D) subsidiary of a Multinational Enterprise (MNE) can be potentially embedded in three different networks viz. the science base of the home country, the science base of the host country, and/or the internal knowledge network of sister subsidiaries and parent MNE. We explore the type of relationship (complementary or substitutive) that exists between the three networks. Further, we develop a set of hypotheses about the factors that are associated with each form of embeddedness. We test these conjectures on data obtained from internationally located MNE R&D subsidiaries. We find that the three types of embeddedness are complementary to each other and the factors associated with each kind of subsidiary embeddedness are different.

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  • Suma Athreye & Georgios Batsakis & Satwinder Singh, 2013. "Subsidiary Embeddedness is a Strategic Choice: Complementarity and the factors associated with different types of embeddedness," DRUID Working Papers 13-05, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:13-05
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    More about this item

    Keywords

    Multiple embeddedness; Multinational enterprises; R&D subsidiaries; complementarity; Subsidiary Roles; Seemingly unrelated regression;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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