Chapter 13 The Innovation Outcomes of MNC Subsidiaries' Local Embeddedness: Evidence from the German ‘Bioregion Rhein-Neckar-Dreieck’ Local Network

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.