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Subsidiary strategy: The embeddedness component

  • Garcia-Pont, Carlos

    ()

    (IESE Business School)

  • Canales, Juan I.

    (University of St. Andrews)

  • Noboa, Fabrizio

    (USFQ Business School)

This paper inductively derives a model that develops the concept of subsidiary embeddedness as the canvas within which subsidiary strategy can take place. Our model identifies three hierarchical levels of embeddedness: Operational embeddedness relates to the interlocking day-to-day relations. Capability embeddedness deals with the development of competitive capabilities for the multinational as a whole. Strategic embeddedness deals with subsidiary participation in the MNC strategy setting. We deem these three types of embeddedness as ways to develop subsidiary strategic alternatives. In as such, different types of subsidiary embeddedness imply different subsidiary roles. Embeddedness, as it was inductively derived from a revelatory case study, is not merely an outcome of the institutional setting, but a resource a subsidiary can manage by means of manipulating dependencies or exerting influence over the allocation of critical resources. A subsidiary can modify its embeddedness to change its strategic restraints. Therefore, the development of subsidiary embeddedness becomes an integral part of subsidiary strategy.

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Paper provided by IESE Business School in its series IESE Research Papers with number D/699.

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Length: 26 pages
Date of creation: 09 Jul 2007
Date of revision:
Handle: RePEc:ebg:iesewp:d-0699
Contact details of provider: Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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  1. Subramaniam, Mohan & Watson, Sharon, 2006. "How interdependence affects subsidiary performance," Journal of Business Research, Elsevier, vol. 59(8), pages 916-924, August.
  2. Birkinshaw, Julian & Hood, Neil & Young, Stephen, 2005. "Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance," International Business Review, Elsevier, vol. 14(2), pages 227-248, April.
  3. Andersson, Ulf & Forsgren, Mats, 1996. "Subsidiary embeddedness and control in the multinational corporation," International Business Review, Elsevier, vol. 5(5), pages 487-508, October.
  4. Taggart, James & Hood, Neil, 1999. "Determinants of autonomy in multinational corporation subsidiaries," European Management Journal, Elsevier, vol. 17(2), pages 226-236, April.
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