Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness

Abstract

Some scholars have argued that globalization will reduce the importance of local contexts. We argue instead that despite the increased frequency and intensity of interactions across local contexts, they continue to retain their distinctive differences. MNEs face growing challenges in managing the complexity of these interactions, because they must manage 'multiple embeddedness' across heterogeneous contexts at two levels. First, at the MNE level, they must organize their networks to exploit effectively both the differences and similarities of their multiple host locations. Second, at the subsidiary level, they must balance 'internal' embeddedness within the MNE network, with their 'external' embeddedness in the host milieu. Balancing the subsidiary's strategic role within the MNE with its local identity and its domestic linkages can sometimes represent a trade-off. Multiple embeddedness thus creates both business opportunities and operational challenges, which are explored in this special issue.

Subsidiary managers’ knowledge mobilizations: Unpacking emergent knowledge flows

“…Contributing to insights on the micro-foundations of knowledge flows, we were surprised by the limited extent to which subsidiary managers searched and mobilized external knowledge, given earlier observations of the positive impact of external embeddedness on competence development (Andersson, Forsgren, & Holm, 2001 and suggestions that host-countries may offer unique, non-redundant, and context-specific knowledge (Meyer et al, 2011).…”

“…One kind of MNC knowledge flows is the leverage of "superior" competences, usually generated by headquarters or advanced subsidiaries with creative roles (Meyer, Mudambi, & Narula, 2011). As a MNC"s knowledge related advantages hinge on its ability to transfer competences internally effectively and efficiently, such competence impacting knowledge flows are a central part of MNC strategy, andsubstantial efforts have been made to build and improve MNCs" capacities to leverage "superior" processes and practices across their dispersed operations.…”

Beyond Simple Configurations: The Dual Involvement of Divisional and Corporate Headquarters in Subsidiary Innovation Activities in Multibusiness Firms

“…To this end, we extend what Poppo (2003, p. 405) called a ''theory of selective corporate involvement'' by specifying influencing factors and their interactions when explaining more than the involvement of just one single (corporate) headquarters. A second contribution of our paper is that it responds to the call for further research on internal embeddedness of subsidiaries (Garcia-Pont et al 2009;Meyer et al 2011). We add understanding to the issue of headquarters involvement in subsidiary activities in terms of elucidating a variation in headquarters involvement as contingent on subsidiary network elements (i.e., intra-/inter-divisional embeddedness and network size) (Saka-Helmhout 2007).…”

“…Drawing on selective hierarchical involvement theory (Poppo 2003) and the literature on subsidiary network embeddedness (Andersson et al 2002;Meyer et al 2011), we investigate drivers of divisional and corporate headquarters involvement in subsidiary innovation development processes in terms of the allocation of (managerial) resources to the same innovation development projects. We refer to this phenomenon as ''dual headquarters involvement'' (Birkinshaw et al 2016).…”

“…We refer to this phenomenon as ''dual headquarters involvement'' (Birkinshaw et al 2016). We use the MNC as our research context and depict such a multibusiness firm as a complex organization with multiple headquarters and subsidiaries that are internally embedded (Meyer et al 2011). Our overarching argument is that the way in which the subsidiary is embedded within the organization drives dual headquarters involvement.…”