The impact of knowledge transfer on foreign subsidiary performance has been a major focus of research on knowledge management in multinational enterprises (MNEs). By integrating the knowledge-based view and the expatriation literature, this study examines the relationship between a multinational firm's knowledge (i.e. marketing and technological knowledge), its use of expatriates, and the performance of its foreign subsidiaries. We conceptualize that expatriates play a contingent role in facilitating the transfer and redeployment of a parent firm's knowledge to its subsidiary, depending on the location specificity of the organizational knowledge being transferred and the time of transfer. Our analysis of 1660 foreign subsidiaries of Japanese firms over a 15-year period indicates that the number of expatriates relative to the total number of subsidiary employees (1) strengthened the effect of a parent firm's technological knowledge (with low location specificity) on subsidiary performance in the short term, but (2) weakened the impact of the parent firm's marketing knowledge (with high location specificity) on subsidiary performance in the long term. We also found that the expatriates' influence on knowledge transfer eventually disappeared. The implications for knowledge transfer research and the expatriate management literature are discussed.

https://papers.ssrn.com/sol3/Delivery.cfm/joms_850.pdf?abstractid=1505037&mirid=1&type=2

Multinational Firm Knowledge, use of Expatriates and Foreign Subsidiary Performance

This paper explores variability across a set of subsidiaries in a given local context and the same industry in terms of innovative performance as an outcome of the manner and extent to which they embed within both corporate (internal) and local (external) counterparts. By drawing on fieldwork evidence of seven subsidiaries operating in Brazil (1996–2007) it was found that: (1) subsidiaries that were able to develop knowledge-intensive linkages with specific internal and external counterparts simultaneously and based on continually increased frequency and improved quality achieved higher innovative performance levels than subsidiaries that developed such linkages with limited frequency and unchanged quality over time; and (2) some counterparts and linkages were more effective than others in terms of contributing to the subsidiaries' innovative performance. By drawing on a novel approach that explores dual embeddedness and its impacts on differences across a set of subsidiaries in terms of innovative performance over time, this paper extends our understanding of embeddedness as part of strategic asset-seeking strategies. It also provides a basis to deepen the analysis of the nuances of multiple embeddedness and its implications for the subsidiary's competitive performance.

https://papers.ssrn.com/sol3/Delivery.cfm/j_1467-6486_2010_00965_x_wml.pdf?abstractid=1763045&mirid=1&type=2

The Role of Dual Embeddedness in the Innovative Performance of MNE Subsidiaries: Evidence from Brazil

Subsidiary importance in the MNC: What role does internal embeddedness play?

The impact of increases in subsidiary autonomy and network relationships on performance

For organizations upgrading their competitive base, innovation is crucial for survival and prosperity (Baumol, 2002). In the field of international business and management, innovation is considered strategically important for the ability of multinational enterprises (MNEs) to build and sustain competitive advantage, thus creating value (Franko, 1989; Hitt et al., 1996). Given these premises, and in line with recent studies, such as the one made by Garcia-Pont et al. (2009) which suggests that researchers have devoted limited attention to the effects of internal embeddedness on the organizational scope of subsidiary initiatives and competitive advantage, we investigate how subsidiary internal embeddedness, pertinent to innovation-developing activities, affects head-quarters involvement in the development process and how these two factors influence the impact and the importance of the innovation.

https://papers.ssrn.com/sol3/Delivery.cfm/j_1467-6486_2011_01014_x_wml.pdf?abstractid=1932564&mirid=1

Internal Embeddedness, Headquarters Involvement, and Innovation Importance in Multinational Enterprises.

This paper inductively derives a model that develops the concept of subsidiary embeddedness as the canvas within which subsidiary strategy can take place. Our model identifies three hierarchical levels of embeddedness: Operational embeddedness relates to the interlocking day-to-day relations. Capability embeddedness deals with the development of competitive capabilities for the multinational as a whole. Strategic embeddedness deals with subsidiary participation in the MNC strategy setting. We deem these three types of embeddedness as ways to develop subsidiary strategic alternatives. In as such, different types of subsidiary embeddedness imply different subsidiary roles. Embeddedness, as it was inductively derived from a revelatory case study, is not merely an outcome of the institutional setting, but a resource a subsidiary can manage by means of manipulating dependencies or exerting influence over the allocation of critical resources. A subsidiary can modify its embeddedness to change its strategic restraints. Therefore, the development of subsidiary embeddedness becomes an integral part of subsidiary strategy.

Subsidiary strategy: The embeddedness component

This article develops the concept of internal subsidiary embeddedness as the canvas within which subsidiary strategy takes place. Developing an inductive model, we identify three hierarchical levels of embeddedness. The first level is operational embeddedness, which relates to interlocking day-to-day relations. The second level is capability embeddedness, which concerns the development of competitive capabilities for the multinational as a whole. The third level is strategic embeddedness, which concerns a subsidiary's participation in a multinational corporation's strategy setting. We derived our concept of embeddedness from an in-depth case study. Embeddedness is not merely an outcome of the institutional setting in which a subsidiary is situated, but is a resource a subsidiary can manage by means of manipulating dependencies or exerting influence over the allocation of critical resources. A subsidiary can modify its embeddedness to change its strategic restraints. Therefore, the development of subsidiary embeddedness becomes an integral part of subsidiary strategy.

/pdf/subsidiary-strategy-the-embeddedness-component-1y6og87zfb.pdf

Subsidiary Strategy: The Embeddedness Component

This paper studies the interplay between top and middle managers as a determinant of strategy-making effectiveness. Participation is a pivotal concern among different types of strategy-making process to grasp the conditions that account for effective strategy-making. We examine how the resolution of the interplay between managerial levels fosters or hinders subsequent managerial action by means of a multiple case design of six Spanish companies. These six organizations shared managerial participation in different degrees as a valued property of their strategy process. First-round interviews with key informants provided a profile for each strategic process. Next, we gathered all key informants in an interactive discussion group, which further evidenced their diversity in the making of strategy. Lastly, we carried out a final round of interviews to enhance clarification. The targeted organizations varied in their types of process, core businesses and size. This variety provided a rich and diverse context to study interaction between upper and lower level managers. By analyzing how interaction resolved into goals and strategy within the different modes of strategy process, we dig into the resolution conditions. We present a theoretical framework that extends existing knowledge on how strategy-making, as a cooperative endeavor between managerial levels, translates strategy into organizational activities. Findings show that legitimation of strategic objectives explains the extent to which tasks are carried out and objectives are accomplished. As an interplay resolution mechanism, legitimation is a property integrated into goals and means through mutual validation by both top management andorganizational members.

/pdf/strategy-making-via-participation-1dysbv7xdh.pdf

Strategy-Making Via Participation

This paper examines the interplay between top and middle level managers as strategy-making settles and in subsequent managerial action. It reports on an exploratory case study at a car service company that has an aggressive expansion strategy. The study examines the context and characteristics of the strategy-making process and the specific evolution of fourteen strategic initiatives. Of particular interest was that the interplay between top managers and middle managers was resolved through a legitimizing mechanism. This interplay took place through deliberation and agreement, with extensive participation, and developed into shared views of strategy which provided legitimation. Once settled, strategic initiatives were subsequently developed in harmony with the strategic intent. This agreement provided guidance to carry out strategic initiatives and was a source of resilient strategic conversation. From analysis of the case, a model presenting how strategic intent interacts with the creation of strategic initiatives is presented. This model aims at overcoming the mutually exclusive bottom-up and top-down sources of influence, integrating both in a process model.

/pdf/strategy-formation-effects-on-managerial-action-strategy-in-41oc2gf80e.pdf

Juan I. Canales

Papers

Subsidiary strategy: The embeddedness component

Subsidiary Strategy: The Embeddedness Component

Strategy-Making Via Participation

Subsidiary strategy: The embeddedness component

Strategy Formation Effects on Managerial Action: Strategy in the Back of Your Head