Subsidiary roles, vertical linkages and economic development: Lessons from transition economies

Abstract

Vertical supply chain linkages between foreign subsidiaries and domestic firms are important mechanisms for knowledge spillovers, contributing to the economic development of host economies. This paper argues that subsidiary roles and technological competences affect the extent of vertical linkages as such as well as their potential for technological spillovers. Using survey evidence from 424 foreign subsidiaries based in transition economies, we tested for the effect of subsidiaries' autonomy, initiative, technological capability, internal and external technological embeddedness on the extent and intensity of forward and backward vertical linkages. The evidence supports our main argument that the potential of technology diffusion via vertical linkages depends on the nature of subsidiary roles. We discuss the implications for transition as well as other developing countries.

The complexity of the business network context and its effect on subsidiary relational (over-) embeddedness

“…While both MNC internal factors (e.g. Andersson et al, 2005;Håkanson & Nobel, 2001;Luo, 2001;Jindra et al, 2009) as well as environmental factors have been proposed to be associated with subsidiary relational embeddedness (e.g. Holm et al, 2005;Chen et al, 2004;Scott-Kennel, 2007;Nell et al, 2010) 1 it is especially environmental characteristics that are often captured in rather rudimentary, limited ways.…”

“…For example, a number of studies use industry or country dummies (e.g. Jindra et al, 2009;Andersson et al, 2005;Chen et al, 2004) despite doubts that the subsidiary's host country is a relevant factor when investigating subsidiary embeddedness (Yamin, 2007). Other studies attempt to measure more directly perceptions of the environment such as the level of competition Scott-Kennel, 2007).…”

The MNC as an externally embedded organization: An investigation of embeddedness overlap in local subsidiary networks

“…Local network relationships have been found to foster subsidiary innovation, e.g. by enabling the firm to appropriate valuable knowledge from the external environment (Hakanson & Nobel, 2001;Lehrer & Asakawa, 2002;Almeida & Phene, 2004;Jindra, Giroud & Scott-Kennel 2009), to drive subsidiary performance (Luo, 2001;Andersson et al, 2002), and to influence headquarters' (HQs) ability to control (Andersson & Forsgren, 1996;Asakawa, 1996). While research has primarily advanced by focusing on the subsidiary as the unit of analysis, there is little disagreement that headquarters maintain relationships to external actors as well.…”

Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

“…MNE's ownership structure is also identified as a linkage determinant with joint ventures establishing more linkages than fully owned subsidiaries (Belberdos et al 2001, Kiyota et al 2008. The third driving factor is the autonomy of the subsidiary, with more independent subsidiaries sourcing more locally (Jindra et al 2009). An additional factor commonly pointed out as a linkage driver is the geographical distance between home and host economy.…”