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.The authors wish to thank the Spanish Ministry of Science and Innovation, Project ECO2011-28991 for financial support