Market performance and technological knowledge transfer of foreign subsidiaries' network embeddedness in Taiwan's electrical and electronic industry

Abstract

This paper explores the importance of foreign subsidiaries' network embeddedness as a strategic resource for market performance and technological competence in multinational enterprises. The conceptual framework of this study is made up of six components: network formative motivation, external network structure, business embeddedness, technical embeddedness, market performance and technological knowledge transfer. Two different types of network embeddedness – business embeddedness and technological embeddedness – are proposed to have an influence on the subsidiaries' market performance as well as on technological knowledge transfer of new products and production processes in the MNE. Using data on 106 Taiwan's electrical and electronic manufacturers gathered from a benchmarking questionnaire, eight hypotheses are tested in a LISREL model analysis. The results reveal that the seven hypotheses are supported, albeit under circumstances in which the relationship between network formative motivation and technical embeddedness is not significant. The study's findings highlight that the foreign subsidiaries' external network embeddedness is a determinate factor in enhancing the whole MNE's competitive capacity.