MNE Headquarter-Subsidiary Relationship and Subsidiary External Network Linkage
Author
Abstract
This paper explores the importance of foreign subsidiary's technical embeddedness network as a strategic resource for subsidiary performance and its importance for MNE competence development in multinational enterprise (MNE). The conceptual model is made up of five constructs, including multidomestic intention, resource gap, technical embeddedness, expected market performance and subsidiary importance for MNE. We see the subsidiary technical embeddedness as (1) the enhancement of capabilities in the subsidiary, coupled with (2) the effects of multidomestic intention and resource gap in internal relationship. Building on this definition and using data in 118 subsidiaries located in Taiwan, the model indicates that MNE internal linkage indeed influences subsidiary network embeddedness. The distinctive features of this paper are to explore the contextual linkage between MNE and its subsidiary business context, and to the development of the concept of subsidiary technical embeddedness. Hypotheses are dawn on the literature and are then tested in a LISREL model based on data concerning 118 foreign subsidiaries in Taiwan, indicating that technical embeddedness has an impact on expected performance increasing perceived by the subsidiary and its role in the development of products and production process in the MNE. Specially, through different external technical embeddedness formed by supplier and customer concludes two distinctive implications for MNE.
