Corporate Embeddedness Research Articles

When Do Foreign Subsidiaries Outperform Local Compatriots? (WITHDRAWN)

This study adopts a dual embeddedness perspective to explore when foreign subsidiaries outperform local compatriots by evaluating the relationship among parent-subsidiary embeddedness (i.e. corporate embeddedness and local embeddedness), subsidiary- specific contingency factors (i.e. business group affiliation and local dispersion), and subsidiary performance in an emerging economy. Our analysis of 1047 subsidiaries indicates that foreign subsidiaries outperform local compatriots when they have higher level of corporate embeddedness and local embeddedness. Specifically, we further propose that these efforts are contingent on subsidiary's business group affiliation and local dispersion. Our findings highlight the importance of parent-subsidiary embeddedness and subsidiary-specific contingency factors in subsidiary performance enhancement.

Влияние корпоративных инвестиций транснациональных компаний на экономическое развитие территории: опыт Венгрии [На англ.

Влияние корпоративных инвестиций транснациональных компаний на экономическое развитие территории: опыт Венгрии [На англ.

The Association between Viability Related Factors and Control Package Choices in the Context of Foreign Subsidiaries

This paper examines the implications of factors relevant to the ongoing viability of wholly owned foreign subsidiary operations on the management control choices exercised by multinational corporation headquarters. We focus on two areas important for wholly owned foreign subsidiary viability, first strategic factors, relating to both corporate and competitive positions, and second integration factors, relating to both foreign subsidiary integration within and outside a multinational corporation. The motivation for this study is based on the continued importance of wholly owned foreign subsidiaries and the associated challenged when controlling these entities. To develop a more comprehensive and holistic understanding of the implications of viability related factors, we apply a control package approach, building on the findings of prior literature. Our evidence is based on a cross sectional survey questionnaire we develop and administer for which we received 159 useable responses. Based on transaction cost economics theory, we hypothesise that viability related factors effect control package choices and in particular effect the greater use of all control packages to a greater extent in situations that are less problematic (low uncertainty, asset specificity and ex-post information asymmetry). Our findings indicate that activity sharing corporate strategies, low cost strategies and higher corporate embeddedness do affect the greater use control packages in many cases, consistent with expectations. However differentiation based competitive strategies and external embeddedness appear to have far more distinct and narrow implications on control package choices. A number of alternative regression modelling approaches are run, however the main continuous variable based regression model results, presented in this paper, appear be explain control packages choices to the greatest extent.

What Shapes Corporate Involvement in Voter Referendums? The Case of Opposition to GM Food Labeling

What propels the involvement of large U.S. corporations into statewide voter referendums? We test the argument of whether corporate political behavior is characterized by firm-level factors or more relational sectoral and classwide networks. Using the 2012 ballot proposition to mandate labeling of genetically modified (GM) foods in California as a case, we analyze corporate donation patterns. We find that while individual interests are significant predictors of involvement, these are eclipsed by relational factors. Corporate embeddedness in sectoral and classwide networks are strong predictors of political involvement, fostering greater opposition to GM food labeling. In addition, using dyadic analysis, we find these networks enable greater unity among these corporations. These findings have implications for our understanding of corporate involvement in voter referendums and on the collective political action of large corporations.

Knowledge-Sharing Subsidiaries in Central and Eastern Europe

This paper investigates reverse knowledge transfer of foreign multinational subsidiaries in Central and Eastern Europe (Czech Republic, Poland and Hungary) in the light of the current political and economic transformations of these former communist countries. The study examines whether foreign subsidiaries in the region share their knowledge base with their sister-subsidiaries and parent company, and the role of various factors in this knowledge sharing. These factors include subsidiary initiative, subsidiary autonomy, local dynamism and corporate embeddedness. A proprietary dataset is used for statistical analysis.

Dual embeddedness, influence and performance of innovating subsidiaries in the multinational corporation

This study adopts a business network view to study the effects of subsidiary embeddedness on both subsidiary influence within the MNC and innovation-related business performance. Through Structural Equation Modeling we analyze subsidiary relationships connected to 85 innovation projects. The results show that external and corporate embeddedness are complementary contexts, although they affect subsidiary influence and performance differently. Whereas external embeddedness directly affects innovation-related business performance, corporate embeddedness strengthens the subsidiary's influence within the MNC, which in turn positively relates to performance. Moreover, as the study also finds that external and corporate embeddedness are positively associated, it stresses the issue of simultaneously balancing both external and corporate relationships (i.e., dual embeddedness) to nurture innovation projects.

Corporate Embeddedness and Control Choices

This paper examines the effect of corporate embeddedness on control choices of a multinational corporation over a wholly owned foreign subsidiary. Researchers and practitioners recognise that multinational corporation headquarters face significant challenges when controlling wholly owned foreign subsidiary operations due to physical distance and the need to adapt to operating in unfamiliar foreign markets. Despite this recognition limited research is available on this issue. Corporate embeddedness refers to the adaption of a subsidiary to other entities throughout the rest of the multinational corporation in terms of tangible and intangible resource flows. Corporate embeddedness appears a significant factor contributing to the viability and success of a wholly owned foreign subsidiary. Based on the transaction cost economies theory of management control this paper investigates the effect of corporate embeddedness on the headquarters’ choice of controls using Spekle (2001) control archetype framework. Specifically corporate embeddedness is linked to transactional attributes including uncertainty, asset specificity, opportunism and bounded rationality, to explore relationships with control archetype choice. The paper proposes that high corporate embeddedness is related to a machine control archetype. Data gathered from a case study of a highly corporately embedded subsidiary of a multinational corporation operating in a regulated consumer products sector is used to examine the link between corporate embeddedness and each of the transactional attributes, and their relationship with headquarters control choices. The evidence provides support to the proposition that high corporate embeddedness is related to machine control archetype. Although action and result oriented machine control archetypes are described separately by Spekle (2001), the controls used by the headquarters suggest a mix of both archetypes.

Globalizing Firms and Small Communities: The Apparel Industry's Changing Connection to Rural Labor Markets*

Abstract This paper explores changing relationships between apparel firms and rural labor markets in Wisconsin over the last decade. Mainstream explanations of recent changes in the apparel industry suggest that rural communities will lose tedious or physically demanding, low-skilled apparel manufacturing jobs but will gain more information-intensive and desirable “apparel service” employment. Through case studies of apparel firms located in two Wisconsin communities, the paper argues that current changes in the industry not only affect communities unevenly but, even in regions where apparel service firms have provided significant numbers of new jobs, these jobs are less well paid, more casually structured, and less secure than manufacturing employment has been. The paper argues that current concepts of the economic embeddedness of firms in communities need to be refined to permit consideration of the kinds of leverage and voice that community organizations have in confronting new forms of corporate capital. The two case studies demonstrate that corporate embeddedness and its labor market outcomes are linked to changes in the global market in which firms compete.

Subsidiary embeddedness and control in the multinational corporation

A subsidiary of a multinational corporation (MNC) is embedded in a network of specific business relationships. It is argued that the degree of subsidiary embeddedness is a function of the adaptation between the subsidiary and direct and indirect counterparts of these relationships. The paper hypothesizes that the higher the degree of embeddedness, the greater the likelihood of counterparts influencing the subsidiary's behaviour. This influence competes with headquarter's desire to exercise control to integrate the subsidiary into the overall corporate strategy. The empirical data presented, collected from 78 subsidiaries of major Swedish MNCs, indicate that embeddedness has an impact on how headquarter's control is perceived by the subsidiary, if embeddedness is separated into external and corporate embeddedness. The test provides support for the opinion that the higher the degree of embeddedness vis-à-vis external customers, suppliers and other counterparts, the lower the degree of headquarters' control, as perceived by the subsidiary. But it also lends support for the view that embeddedness vis-à-vis corporate counterparts works in the opposite direction; it rather tends to increase the control perceived at the subsidiary level. These results indicate that competition for influence over the subsidiaries' behaviour, as seen from the headquarter's point of view, arises primarily from external actors who have business specific relationships with the subsidiary.