Does dual Embeddedness matter? Mechanisms and patterns of subsidiary ambidexterity that links a Subsidiary’s dual Embeddedness with its learning strategy

Abstract

This study extends the idea of subsidiary ambidexterity as a subsidiary’s attempt to obtain a fit between its dual embeddedness (i.e. ambidextrous contexts) and its learning strategy (i.e. ambidextrous behaviors). We design a dyadic survey to collect data from Taiwanese MNEs and their Chinese subsidiaries to test our arguments. First, we redefine subsidiary ambidexterity as a three-step mechanism in which three different types of dual embeddedness will cause different legitimacy effects (resource or conformity effect), which will then result in a subsidiary’s different learning strategies. Second, we propose three different subsidiary ambidexterity patterns: (1) a subsidiary will prefer in maintaining higher external than internal political embeddedness, which leads to their focusing on exploitation (an adaptability case of ambidexterity); (2) a subsidiary will intend to develop both high external and high internal cultural embeddedness and that will cause them to explore and exploit simultaneously (an alignment case of ambidexterity); and (3) in sometimes a subsidiary will prefer to maintain higher external than internal cognitive embeddedness and that will lead the subsidiary to emphasize exploration, whereas in other times a subsidiary will prefer to have higher internal cognitive than external cognitive embeddedness and that will lead the subsidiary to emphasize exploitation (a balancing case of ambidexterity). Our view can largely contribute to the subsidiary learning literature.