External Embeddedness Research Articles

A paradoxical perspective on subsidiary autonomy and MNE entrepreneurial initiative support: uncovering the role of organizational complexity and external embeddedness

PurposeThis study examines the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration (i.e. entrepreneurial initiative resource support, the subsidiary seeks and receives from the MNE). It proposes some underlying mechanisms as external embeddedness, and MNE organizational structures to explain the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration. The study draws on paradox theory arguing how at both the subsidiary and the parent MNE levels certain paradoxes are handled.Design/methodology/approachSurvey data are collected in a time-lagged fashion from 429 foreign subsidiaries in New Zealand. Data are analyzed using structural equation modeling.FindingsResults show that the relationship between subsidiary autonomy and the receipt of MNE resource support for initiatives is positive, and this is more likely the case where the subsidiary is managed under simple structures (i.e. subsidiary reports to corporate headquarters, regional headquarters or mandated units) rather than complex structures (i.e. a matrix or a network). Furthermore, an increase in subsidiary autonomy positively influences MNE initiative resource-seeking, and this is more likely the case where the subsidiary is less embedded externally.Originality/valueThe study is one of the first of studies that has applied paradox theory to MNE–subsidiary relationships regarding autonomy and MNE collaboration on initiatives. The study extends research on MNE–subsidiary collaboration on subsidiary initiatives as existing research is limited on this domain. The study contributes by showing how external embeddedness, and the complexity of organizational structures determine the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration.

Role of Subsidiary Autonomy and Embeddedness in Subsidiary Knowledge Development: Emerging Economy Perspective

ABSTRACT: This study examines the factors contributing to developing subsidiary knowledge in Malaysian foreign subsidiaries. Prior research on subsidiaries in multinational corporations has either concentrated on transferring knowledge from headquarters to subsidiaries or vice versa, ignoring the factors associated with subsidiary knowledge development through embedded relationship factors. Although embedded relations are essential for developing knowledge, the direction is most important for developing subsidiary knowledge. The significance of subsidiary knowledge development, subsidiary autonomy, and external and internal embeddedness has been poorly illuminated by prior research. This is because the perception of knowledge development is emphasized from the headquarters' perspective, while the subsidiary functions as a passive recipient. Using the resource-based and network theories, we argue that subsidiary development depends on the subsidiary's autonomy practice and the level of engagement or network relations between external and internal network partners. Our research shows that subsidiary autonomy and external embeddedness are the most significant predictors of subsidiary knowledge development. Internal embeddedness in subsidiary knowledge development is inconsistent with the theoretical assumptions for subsidiary autonomy and external embeddedness. In regression analysis, the survey results of 170 foreign-owned subsidiaries in Malaysia validate our hypotheses. According to the results of this study, subsidiary autonomy and external and internal embeddedness are the most significant predictors of subsidiary knowledge development. This study's findings have implications for subsidiary administrators in developing nations and multinational corporations. While subsidiaries are developing their knowledge, multinationals need to consider how much autonomy to offer them in this process. When subsidiaries are able to make independent decisions, embedded relationships will increase, and knowledge will be more likely to develop. This specific knowledge eventually contributes to the knowledge base of the MNE.

Enduring buyer–supplier relationship and buyer performance: the mediating role of buyer–supplier dyadic embeddedness and supplier external embeddedness

PurposeThe purpose of this research is to investigate the causal mechanisms that explain the relationship between the long-term buyer–supplier relationship and buyer performance. Building on the growing body of research on social capital in supply chain management (SCM), the authors examine how a buyer achieves superior performance in forming the enduring partnership with a supplier through two different forms of supplier embeddedness: buyer–supplier dyadic embeddedness and supplier external embeddedness.Design/methodology/approachThe bootstrapping method is utilized in data analysis to examine the mediating effects of the two different forms of supplier embeddedness simultaneously on the linkage between the duration of buyer–supplier relationships and buyer performance outcomes.FindingsThe authors find that the two forms of supplier embeddedness serve as distinct conduits for the buyer to translate the long-term buyer–supplier relationship into performance effectiveness. Notably, dyadic embeddedness only mediates the linkage between the duration of buyer–supplier relationships and buyer economic performance, while supplier external embeddedness solely mediates the linkage between the duration of buyer–supplier relationships and buyer innovation performance.Originality/valueThis study empirically demonstrates that different forms of supplier embeddedness may benefit a buyer differentially when directed at distinct performance goals. If a buyer can leverage both buyer–supplier dyadic embeddedness and supplier external embeddedness, the buyer will overcome value creation limitations of social capital from a single source, obtaining more comprehensive performance benefits sought by developing long-term buyer–supplier relationships.

How Subsidiary Internal and External Embeddedness Affects an MNE’s Attention Allocation?

Existing literature has suggested that MNEs direct attention and resources based on subsidiaries’ actions and attributes. Yet whether or not subsidiaries’ internal and external embeddedness affects MNE attention allocation remains underexplored. We postulate that the more embedded a subsidiary is internally within an MNE and/or externally within its host country, the more likely it is that the subsidiary will receive positive notice from the MNE. Subsidiaries’ internal and external linkages matter for subsidiary operations, meriting the MNE’s regard. We furthermore suggest that these proposed effects of internal and external embeddedness would change depending on certain boundary conditions. Results based on a sample of Japanese MNEs and their subsidiaries operating within Asia support our arguments. Our findings advance the literatures on both the attention-based view and headquarters-subsidiary relationships.

Renewing Subsidiary’s Innovative Capabilities through Flexible Design, Contextual Ambidexterity, and External Embeddedness

Purpose – The primary purpose of this paper is to show that to renew static innovative capabilities, a subsidiary needs to have a flexible design to support exploitation-exploration innovation and external embeddedness as a source of new knowledge. Theoretical framework – We combine organizational structure, organizational innovation, contextual ambidexterity, and network theory to investigate how innovative capabilities can be built in foreign subsidiaries operating in Brazil. Design/methodology/approach – Data were collected from foreign subsidiaries installed in Brazil through a survey of 289 valid respondents. We used the PLS-SEM technique to test relationships involving flexible structure, contextual ambidexterity, external embeddedness, and innovative capabilities to run a moderate-mediate model. Findings – The evidence indicates that a flexible structure, contextual ambidexterity as a dynamic capability, and external embeddedness are relevant elements for renewing a subsidiary’s innovative capabilities. The findings suggest that external embeddedness is a crucial knowledge source, depending on the trust and commitment at the network level. High external embeddedness enables the subsidiary to achieve optimized levels of exploration and exploitation, helping in the renewal of innovative capabilities. Practical & social implications of research – We provide managers with information on developing and renewing innovative capabilities by creating a flexible design that facilitates the acquisition of unique network resources and allows contextual ambidexterity as a dynamic capability to reconfigure and transform innovative capabilities. Originality/value – The article contributes to the strategic management and capability-based view of MNE subsidiaries literature. We introduce the construct of a flexible organizational structure, which combines organizational structure theory and organizational innovation characteristics. We show that a flexible design is essential to build a trustful local network and implement contextual ambidexterity as a dynamic capability to renew innovative subsidiary capabilities. Keywords: Organizational structure, organizational innovation, contextual ambidexterity, external embeddedness, innovative capabilities.

Managing internal embeddedness in multinational corporations’ R&D subsidiaries: An evolutionary perspective on the automotive industry in Silicon Valley

This paper analyses the processes through which multinational corporations' R&D subsidiaries conduct dual embeddedness from an internal embeddedness approach. While most studies that adopt a dual embeddedness perspective have analysed the influence of internal embeddedness on external embeddedness as a single effect (positive or negative), we offer a different stance by considering it through a double-edged effect. We conduct a multiple case study of R&D subsidiaries located in Silicon Valley and belonging to eight of the world's largest automotive manufacturing multinational corporations. By adopting an evolutionary perspective based on an analysis of a 23-year period (1995–2018), we find and unravel how to manage the double-edged effect of R&D subsidiaries' internal embeddedness on the development of external embeddedness by specifying two main levers: the autonomization of R&D subsidiaries and the headquarters' knowledge support of the subsidiaries. Our findings thus advance the understanding of R&D subsidiaries' dual embeddedness and external knowledge sourcing in technological contexts by proposing a model of the double influence of internal embeddedness on external embeddedness.

The role of subsidiary dual embeddedness and absorptive capacity in a transition economy

PurposeThis study aims to focus on dual embeddedness as an important channel through which foreign subsidiaries access and share valuable and idiosyncratic knowledge within the multinational corporation (MNC). The authors examine the dual embeddedness challenges of foreign subsidiaries based in the context of Iran as a transitional market.Design/methodology/approachThe final sample includes 144 active foreign subsidiaries in Iran from across a broad range of industries. A structured questionnaire was distributed to firms and structural equation modeling was adopted to analyze the results.FindingsThe findings reveal how building external embeddedness in an environment with potentially poor access to valuable knowledge, and risk of knowledge leakage impacts the subsidiary’s ability to subsequently transfer this knowledge within the MNC. The authors identify the significance of absorptive capacity as a way for the subsidiary to access knowledge from and share knowledge with firms in the local market.Originality/valueDeparting from existing work on subsidiary embeddedness in developed markets, the authors reveal how competence creating subsidiaries manage dual embeddedness and knowledge transfer in transition economies that are low in knowledge stocks. The authors unpack how subsidiary absorptive capacity enables access to local knowledge in a transitional market and increases reverse knowledge transfer in the MNC. In doing so, the authors answer calls for work on the dynamic and complementary relationships that exists between subsidiary dual embeddedness, absorptive capacity and knowledge sourcing in less open markets. Focusing on Iran as a transitional economy, this study provides greater contextual nuance to the extant literature on subsidiary dual embeddedness.

The moderating role of R&D intensity on the association between external embeddedness and subsidiary product innovation: evidence from Vietnam

ABSTRACT Drawing on the business network theory and the resource-based view, we investigate the moderating role of R&D intensity on the relationship between subsidiaries’ external embeddedness in a host country and the probability of subsidiary product innovation. Using data from 402 subsidiaries located in Vietnam, the Probit regression results revealed that the higher the subsidiary’s embeddedness with local sales and local input suppliers in a transition economy, the higher the probability that it will achieve product innovation. R&D intensity positively moderates such associations. Our finding extends the argument of the business network theory by stressing the need of MNEs to use their foreign subsidiaries in transition economies to gain local knowledge and other resources from local sales agents and local input suppliers; they can do so by embedding themselves into the environment and simultaneously using these sources and internal resources to strengthen their product innovation possibilities.

Autonomy and MNE Support for Initiatives: Roles of Embeddedness and Organizational Structures

In this study we examine the relationship between subsidiary autonomy and the initiative resource support a subsidiary requests and receives from the MNE. Drawing on resource dependence, social exchange and organizational theoretical perspectives, we propose some underlying mechanisms as external embeddedness, reverse knowledge transfers, and MNE organizational structures to explain the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration. We draw on survey data from 429 foreign-owned subsidiaries in New Zealand and employ structural equation modelling. Results show that the direct relationship between subsidiary autonomy and the receipt of MNE resource support for initiatives is negative and this is more likely the case where the subsidiary is managed under simple structures (i.e. subsidiary reports to corporate headquarters, regional headquarters, or mandated units) rather than complex structures (i.e. matrix or network). Furthermore, an increase in subsidiary autonomy positively influences MNE initiative resource-seeking and this is more likely the case where the subsidiary is less embedded externally. Subsidiary initiative resource-seeking from the MNE is positively associated with the subsidiary initiative resource-receipt from the MNE, and this is more likely the case where the subsidiary is engaged in reverse knowledge transfers. This study contributes by extending the research on subsidiary autonomy, dual embeddedness, organizational structures, and subsidiary initiatives. It contributes by showing how dual embeddedness, and the complexity of organizational structures determine the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration.

The impact of external, internal, and dual relational embeddedness on the innovation performance of foreign subsidiaries: Evidence from a developing country

As parts of a global network, foreign-owned subsidiaries enjoy privileged access to knowledge sources both internal (within their multinational group) and external (involving other organizations in the host location), and this has proven especially relevant in their assumption of greater creative responsibilities that increase the technological capabilities of their multinational group. This study investigates whether external and internal relational embeddedness are mutually reinforcing (complementary) or whether they act separately in explaining superior innovation performance of foreign-owned subsidiaries in terms of a greater propensity to obtain radical innovations. The empirical analysis uses both direct and indirect tests to evaluate the complementarity, as well as a rich firm-level panel data on foreign subsidiaries, extracted from a census of Colombian manufacturing firms for the period 2008–2014. Our findings reveal that external relational embeddedness in isolation (without internal embeddedness) has a positive impact on performance only in terms of incremental innovation, while internal embeddedness alone (without external embeddedness) has no effect on the innovation performance of subsidiaries. However, we find that a complementary and dynamic relationship exists between external and internal linkages to spur radical innovation outcomes, which in turn are related to the competence-creating roles in foreign subsidiaries as prior literature has shown.

The Role of External Embeddedness and Knowledge Management as Antecedents of Ambidexterity and Performances in Italian SMEs

Sourcing and leveraging knowledge from an external network is only half the battle for firms that would become more successful. In fact, the mere access and acquisition of the knowledge itself through embedded ties does not secure to perform exploration and exploitation activities, and consequently, to achieve better performance because knowledge has to be managed. Firms' knowledge management (KM) orientation may help in the process of knowledge acquisition, sharing, and transfer, consequently, improving firms' ambidexterity and competitiveness. Thus, this paper proposes that the KM plays a key role in determining the outcomes of firm's external embeddedness, i.e., the characteristics and ties of the external network, on the ambidexterity and performances of small and medium enterprises (SMEs). An empirical analysis has been developed by using structural equations modeling with data collected from CEOs in 119 Italian SMEs in the ceramic tile industry. Findings show that the KM plays a significant role in mediating the effects of the external embeddedness on the firm's ambidexterity that in turn enhances the performances of Italian SMEs in our sample. Based on our results, implications for academics and managers and future line of research are proposed.

Institutional Distance and MNE‐subsidiary Initiative Collaboration: The Role of Dual Embeddedness

Entrepreneurial initiatives by subsidiaries are greeted as well as contested. We examine the effect of institutional distance between the host country of a subsidiary and the home country of its parent multinational enterprise (MNE) on the resource support a subsidiary receives from the MNE for its entrepreneurial initiatives. Drawing on social exchange theory, and resource dependence theory, we argue that while informal institutional distance inhibits MNE resource support for initiatives, and formal institutional distance further exacerbates the subsidiaries' options, external embeddedness and reverse knowledge transfers may help subsidiaries bypass the negative effects of institutional distance and encourage MNE involvement in subsidiary initiatives. Using survey data from 429 foreign subsidiaries in New Zealand, and secondary data on formal institutional distance from the Worldwide Governance Indicators, the results from structural equation modeling provide support to our hypotheses. This study extends institutional distance, embeddedness, and subsidiary initiative research. Importantly, it contributes by demonstrating how contingencies such as dual embeddedness and (low) formal institutional distance can counterbalance the negative effects of informal institutional distance on subsidiary initiatives and MNE‐subsidiary initiative collaboration.

Strategic orientation toward digitalization to improve innovation capability: why knowledge acquisition and exploitation through external embeddedness matter

Purpose This study aims to analyze the mediating effect of the open innovation processes of knowledge acquisition and exploitation as external embeddedness strategy on the relationships between strategic orientation toward digitalization and the three dimensions of the innovation capability: client, marketing and technology. Design/methodology/approach The research model was tested using a structural equation modeling design based on survey data from a financial and insurance sector multinational enterprise with direct operations in seven emerging countries. This sector is classified as being highly digitalized. Findings The results show that strategic orientation toward digitalization has an effect on innovation capability, with a greater impact on the client and technology dimensions than on the marketing dimension. However, the relationships with clients and technology are partially mediated by acquisition, while the one with marketing is mediated by exploitation. Originality/value This finding widens the current purpose and theoretical sense of external embeddedness as a type of inter-organizational arrangement key for digitalization in the literature, which is focused on the adaptation of digital technology of the head office to the needs of the subsidiaries and the systems of their local allies. By contrast, the study results show that external embeddedness is key for the multinational to be able, from its global way of creating value through digital technologies, not only to improve operating efficiency, but also to meet costumer experience expectations in each host country and innovate in local commercialization strategies, on account of the knowledge transfer between the multinational and the local players on customer preferences and technology uses in local markets.

Criação de Inovação Local por Subsidiárias Estrangeiras a partir de Vantagens Específicas do Ambiente Subnacional

Objetivo - O estudo objetiva examinar os efeitos dos fatores do ambiente subnacional brasileiro – a eficiência do ambiente competitivo subnacional e o embeddedness relacional em cada localidade subnacional - na criação de inovação local em subsidiárias estrangeiras. Método – A abordagem é quantitativa e a pesquisa baseia-se em dados primários coletados por meio de uma survey com 152 subsidiárias estrangeiras localizadas em treze Estados do Brasil e em dados secundários do World Bank Enterprise Surveys. Os dados são analisados por regressão linear múltipla. Principais resultados - Os resultados mostram que existe uma associação positiva e significante entre o ambiente competitivo subnacional e inovação local das subsidiárias. Entretanto, não é observada uma associação significativa entre o embeddedness externo subnacional e a inovação local. Além disso, os resultados mostram que as empresas que entram por meio de aquisições estão mais associadas à inovação local. Relevância/Originalidade - O estudo procura complementar o debate sobre o efeito do ambiente subnacional na inovação local das subsidiárias tendo como contexto o Brasil. A análise em nível subnacional considera a heterogeneidade institucional subnacional e revela variações que poderiam ser desconsideradas por uma análise de nível nacional. Contribuições teóricas/metodológicas: Embora existam indícios do impacto do ambiente institucional na estratégia e inovação, este estudo no âmbito brasileiro avança em dois pontos. Primeiro, os estudos existentes analisam mercados desenvolvidos e mercados emergentes, porém esses últimos de forma pontual e numa realidade asiática, que apresenta uma considerável diferença do mercado latino americano e brasileiro, destacando-se as peculiaridades do ambiente subnacional brasileiro. Segundo, contribui para os estudos de Geografia Econômica reforçando que cada ambiente subnacional tem suas particularidades, conforme demonstrado na natureza das questões subnacionais no Brasil.Contribuições sociais / para a gestão: Em termos gerenciais, o estudo chama a atenção para a importância do conhecimento da dinâmica competitiva subnacional quanto à participação da economia informal e estende implicações para políticas públicas.

The roles of external embeddedness and institutional distance in the subsidiary product/process innovation and R&D capacity

PurposeThis study aims to look at the relationship of external embeddedness and institutional distance (governance aspects) with the foreign subsidiary research and development (R&D) capacity. Furthermore, it examines whether these relationships are mediated by subsidiary product and process innovation, and whether institutional distance plays a moderating role in the relationship between subsidiary innovation and R&D capacity.Design/methodology/approachThe authors draw on survey data from 130 foreign subsidiaries operating in Brazil and test their model using variance-based structural equation modeling.FindingsResults suggest that subsidiary (product and process) innovation fully mediates the relationships between: subsidiary external embeddedness and R&D capacity; and institutional distance and subsidiary R&D capacity, such that the relationship is positive in case of the former and negative in case of the latter. The relationship between subsidiary product and process innovation and R&D capacity is positive and stronger at lower levels of institutional distance.Originality/valueThe research ignores the underlying mechanisms of the external embeddedness and institutional distance relationship with subsidiary R&D capacity. Furthermore, institutional distance based on formal governance aspects and their impacts on subsidiary innovation and R&D capacity are rarely investigated. This paper contributes with regard to these aspects.

Headquarters′ monitoring mechanisms, subsidiaries’ financial slack, and the contingent role of subsidiaries′ external embeddedness

Within MNCs’ foreign subsidiaries financial slack, i.e., uncommitted financial resources in excess of those needed for current operations, may incur costs for headquarters. These costs may emanate from subsidiaries' decision to forego investment opportunities and stockpile cash instead, which, in turn, may lead to fewer resources being available for redistribution within the organization. From an agency theory perspective, headquarters can minimize these costs through monitoring mechanisms. While agency theory is considered theoretically appropriate for the study of the headquarters-subsidiary relationship, it reflects a rather undersocialized manifestation of human behaviour, which in turn limits its applicability. In this paper, we attempt to address this limitation by suggesting and empirically exploring that the effect of monitoring mechanisms is dependent (1) on the different types of monitoring used, and (2) on subsidiaries' external embeddedness. Drawing on empirical evidence from 94 subsidiaries of foreign multinationals operating in Greece, we provide some initial evidence on the differential impact of monitoring through expatriates and monitoring through bureaucratic processes. Most importantly, we show that subsidiaries' structural embeddedness moderates both associations. In doing so, we reveal that whether subsidiaries behave opportunistically or as good citizens is partially determined by the social context in which they are embedded. An unexpected finding concerns the positive effect of the origin of the CEO on subsidiaries' financial slack for expatriates compared to local managers. This finding underscores the importance of the CEO identity, and highlights the need for future research exploring its effect on subsidiaries' performance.

Digital transformation of global business processes: the role of dual embeddedness

PurposeWhile much existing research on multinational corporation (MNC) digital transformation has followed a linear design and implementation logic using cross-sectional data, the multiple and divergent needs of headquarters (HQ) and subsidiaries suggest that MNC digital transformation actually involves a more iterative journey. The purpose of this paper is to apply the theoretical perspective of embeddedness to better define the complexities of MNC digital transformation, and identify how HQ and subsidiaries can navigate the complexities.Design/methodology/approachThis paper presents a longitudinal multi-case study of five Forbes Global 2000 firms that are HQ in Europe with large subsidiaries in the USA. The authors conducted in-depth interviews with 26 senior executives at HQ and subsidiaries over a 15-month period.FindingsThe process of digital transformation is significantly influenced by internal embeddedness (relationship of HQ with subsidiaries and across subsidiaries) and external embeddedness (relationship of subsidiaries with their local markets), and also by strategy, financial and technology considerations. While HQ and subsidiaries have different perspectives, an understanding of these influences can help HQ and subsidiaries navigate digital transformation.Research limitations/implicationsHQ and subsidiaries can apply insights from this research to navigate the complexities of digital transformation.Originality/valueThis paper demonstrates that embeddedness is a useful theory to understand the complexities of MNC digital transformation.

Recent Trends of Regional Development in China – Technological Portfolios and Economic Growth

AbstractThis paper analyses recent patterns and trends of technological development in Chinese provinces. It reflects on characteristic distinctions between these regions’ portfolios of technological activity as well as the local matches between scientific, technological and economic efforts within them. Building on both theoretical and country specific literature, it suggests that, in China, the internal structure of technological activities might play a lesser role for economic development than in established market economies while their external embeddedness could be more important. Based on a comprehensive dataset, it identifies characteristic profiles and pathways of development among China’s provinces. With a view to those, its findings suggest a continued relevance of existing legacies but, equally, newly emerging industrial dynamism. While related variety is now present in many leading regions, the local match between technological and economic activities remains the most relevant discriminator between already well-developed provinces and those catching up with the leading group.

Institutional antecedents of subsidiary external embeddedness: Coping with regulatory competitive constraints

We investigate institutional antecedents to subsidiary external embeddedness and relate regulation constraining competition in local service sectors to subsidiary embeddedness with local partners in complementary sectors. Combining research on business networks with arguments derived from transaction cost economics, we argue that subsidiary external embeddedness depends on the extent of transaction costs originating from small numbers bargaining, which regulatory competitive constraints in local service sectors are a source of. Based on this logic, we suggest that low and high levels of regulatory competitive constraints are associated with greater subsidiary external embeddedness. We also suggest that this U-shaped relationship is more pronounced for subsidiaries that are centers of excellence within the multinational enterprise because these subsidiaries heavily depend on the local context as a source of their competitive advantage over their sister subsidiaries.

Information technology capabilities and organizational agility

PurposeCurrently, it is commonly accepted that information technology capabilities (ITC) positively influence organizational agility. Nevertheless, studies have recently started to demonstrate that different organizational factors mediate this relation under the controvertible assumption that companies are capable of responding quickly to market changes using their IT in combination with other internal resources. Therefore, companies have given very little attention to collaborative work with external partners. The purpose of this study is to analyze the mediating effects of the acquisition and exploitation capabilities of open innovation on the information technology capabilities – organizational agility relationship.Design/methodology/approachStructural equation modeling was used to test the proposed model with survey data from a multinational corporation that operates in South American emerging economies in the pension and savings businesses.FindingsThis study found that only the open innovation capability of exploitation has a partial mediating effect. This means that this organizational ability serves as a bridge so that IT capabilities can have a positive incidence on organizational agility.Originality/valueThis paper adopts a more novel study focus that emphasizes the importance of collaborative work and of the use of external resources that are implicit in open innovation capability. On the other hand, this organizational ability implies external embeddedness, which is usually approached mainly from the network theory in the international business literature; however, this study offers a more interesting study focus in which externally oriented organizational abilities such as open innovation are more important for external embeddedness than are the size and quality of the external network.