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

Abstract

In this paper we apply a business network perspective to investigate the effects of internal embeddedness and headquarters involvement on subsidiaries' innovation-related competencies, and on the perceived importance of innovation in multinational enterprises. A model framed in the innovation context is developed and six hypotheses are tested on 85 innovation projects in 23 multinational enterprises using partial least squares based structural equation modelling. The results suggest that, contrary to predictions of the business network perspective, headquarters involvement in the innovation development process improves subsidiary competencies while internal embeddedness does not. Headquarters involvement, driven by subsidiary internal embeddedness, enhances the innovation impact on the subsidiary, which in turn influences innovation importance at corporate level. Thus, the business network perspective is challenged but at the same time expanded in terms of highlighting the role of, and interplay between, different internal corporate actors, particularly the role of headquarters, in developing competencies and creating competitive advantage.

Boundary Capabilities in MNCs: Knowledge Transformation for Creative Solution Development

“…We sampled 67 such problem solving projects. This sample size compares well with other studies that examined complex, organizational projects or initiatives (Ciabuschi et al, 2011;McGrath, 2001).…”

Parenting Advantage in the MNC: An Embeddedness Perspective on the Value Added by Headquarters

“…To this end, we argue that headquarters embeddedness in the subsidiary's network is similar to concepts such as 'headquarters involvement' (see Bouquet and Birkinshaw, 2008;Ciabuschi, Dellestrand, and Martin, 2011;Poppo, 2003) and is one visible manifestation of the headquarters' parenting strategy for a particular subsidiary. 3 Headquarters investing in local embeddedness build external ties that make their staff more involved in the subsidiaries' operative contexts, shape the managers' work experience (as well as their learning), and convey information about the context that augments the managers' knowledge (Adner and Helfat, 2003).…”

“…We employed PLS structural equation modeling (SEM) with one-tailed t-tests using SmartPLS (Ringle, Wende, and Will, 2005). PLS has recently gained popularity in strategy and management research (e.g., Ciabuschi et al ., 2011;Gruber et al ., 2010), and it is appropriate in our research context. PLS is a causal modeling approach aimed at maximizing the variance explained in the dependent latent variable.…”

In the Right Place at the Right Time!: The Influence of Knowledge Governance Tools on Knowledge Transfer and Utilization in MNEs

“…This is also true for the specific knowledge developed, i.e., not only is the subsidiary developing the knowledge perceived as important, but so is the specific knowledge per se. Consequently, innovations subject to transfer that have received headquarters' attention through its direct involvement during the development stage are, by definition, allocated resources and prioritized by headquarters (Ciabuschi, Dellestrand, and Martín Martín, 2011b). By involving itself in the innovation's development, for instance by specifying requests, the outcome of the development process is affected and the developed innovation is more suitable for other MNE subsidiaries.…”