Phillip C Nell

This study investigates the entrepreneurial capabilities of MNE units at intermediate geographical levels, between the local subsidiary level and global corporate headquarters. In our conceptual development, we build on the entrepreneurship and MNE embeddedness literature to explain how MNE units at intermediate geographical levels differ from local subsidiaries and global corporate headquarters, and why those differences are important. We illustrate our arguments using data on European regional headquarters (RHQs). We find that RHQs’ entrepreneurial capabilities depend on their external embeddedness and on the heterogeneous information that is generated through dissimilar markets within the region. Our study opens up for an interesting discussion of the independence of these mechanisms. In sum, we contribute to the understanding of the entrepreneurial role of intermediate units in general and RHQs in particular.

This article analyzes political strategies of MNC subsidiaries in emerging markets. We find that institutional pressures from public and private non-market actors in the emerging market lead to increased political activism. Furthermore, we find that these relationships become stronger, when the external pressures are joined by strong firm-internal pressures. Our findings contribute to the scarce literature on firms’ political strategies in emerging markets. They also support recent criticism of institutional theory’s strong focus on isomorphism as the most important legitimacy-conveying mechanism. We argue that the isomorphism-based either-or logic gives way to stronger agency of the subsidiary and to a logic of active negotiation and social construction of the subsidiary’s legitimacy in the emerging market. Our findings show support for this idea as political activism is one such way how the subsidiary’s legitimacy can be built and nurtured.

This study investigates local vertical linkage patterns of foreign subsidiaries. Specifically, we look at the dual role of such linkages as conduits for learning as well as potential channels for spillovers to competitors. On the basis of data from 97 subsidiaries and their most important local partners (customers and suppliers), we analyze the quality of such linkages under varying levels of competition and subsidiary capabilities. We capture the quality of local vertical linkages using a multidimensional measure that focuses on mutual adaptation and breadth of interaction between the subsidiary and the local partner. Our theoretical development and the results from our empirical analysis document a far more complex and dynamic relationship between levels of competition and MNCs’ local participation in knowledge intensive activities, i.e. learning and spillovers, than previous studies do. We find a curvilinear relationship between the extent of competitive pressure and the quality of local linkages confirming our argument of a trade-off between learning prospects and spillover risks. In situations of a lot of competition, our subsidiaries seem to shy away from further increasing the relationship quality to their most
important customers and suppliers. Furthermore, the level of subsidiary capabilities moderates this relationship. These are truly new findings with interesting implications for the study of FDI, local vertical linkages, and the MNC literature.

What determines the value an MNC's headquarters adds to its own affiliates? In this paper, we shed light on this question by linking the embeddedness view of the multinational corporation to the literature on parenting advantage. We test our hypotheses on an original dataset of 124 manufacturing subsidiaries located in Europe. Our results indicate that the external embeddedness of the MNC is an antecedent to headquarters' value creation. We find that headquarters' investments into their own relationships with the subsidiaries' contexts are positively related to the value added by headquarters. Furthermore, this relationship is stronger when the subsidiary itself is strongly embedded. We discuss implications for the MNC literature, embeddedness research, and the literature on parenting and headquarters' roles. Copyright © 2013 John Wiley & Sons, Ltd.

Examining parallels in the long-term evolution of the German and US university systems, this paper formulates hypotheses about the rise and decline of university entrepreneurialism at the national level. Three macro-level antecedents of university entrepreneurialism are identified: (1) decentralized competition; (2) latitude in mission and revenue mix; (3) a nationwide, diversified bidding system for the funding of large-scale university-based research. Of these, the third is real lynchpin of university entrepreneurialism. Arguing for a multidimensional understanding of such entrepreneurialism (i.e. beyond just the commercialization of scientific discoveries), the paper identifies three developments within universities emanating from a favorable national environment: (1) organizational innovations for achieving economies of scope; (2) an institutionalized capacity for strategic selection of research foci; and (3) a capacity to contribute to the development of new industries. The analysis suggests that as national university systems grow and run into cost containment problems, political pressures for reform increase, leading to system homogenization; system homogenization weakens the contextual sources of entrepreneurialism and triggers a process of decline.

This paper investigates the role Regional Headquarters (RHQs) play in large multinationals. It investigates if the establishment of a RHQ creates “hierarchy benefits” to the firm that are in line with eh M-form principles. Based on rich qualitative data that we collected for nine different firms (MNCs) in three different industries, we find evidence for benefits of hierarchy when RHQs are introduced very much along the lines of the classic M-form organization with product divisions. However, M-form principles are taken ad absurdum by the fact that there seems to be constant re-organization regarding the mandates and the geographic scope of the regions. This calls into question the effectiveness of RHQs.

MNCs have been conceptualized as differentiated networks that, in turn, are embedded in external networks. Previous research has predominantly focused on the embeddedness of established subsidiaries into their local environment, omitting to shed light on the phenomenon of headquarters linkages to the local context which creates embeddedness overlap. We develop a model of why MNCs develop overlapping linkages to local subsidiary networks even if the subsidiaries have grown out of the initial start-up phase. Using detailed information on 168 European subsidiaries, we find that MNCs build and maintain more overlapping network ties when subsidiaries are high performers, hold important resources, operate in turbulent environments, and are closely connected to multinational actors as opposed to purely domestic firms.

In networked MNCs where knowledge and power are distributed, corporate strategy processes benefit from input arising from many different levels of the organization. Recently, the regional (i.e., supra-national) level has been emphasized as an important additional source of knowledge and input, and as a bridge between local subsidiaries and global corporate headquarters. This paper builds theory on the antecedents to regional headquarters' influence on corporate decisions (i.e., organizational, behavioral, and motivational). Based on a survey of regional headquarters in Europe and their relations with MNC headquarters, we provide empirical evidence that a regional headquarters' autonomy and signaling behavior have significant effects on its influence on corporate strategy. Furthermore, we find support for our hypothesis that the regional headquarters' charter moderates such bottom–up influence.

Purpose – The purpose of this chapter is to develop a more fine-grained model of the relationship between multinational corporation (MNC) external embeddedness and subsidiary contribution to firm-level competitive advantage.

Methodology/approach – We briefly review previous international management literature and show that the conception of MNC embeddedness in external networks is often simplistic. We develop the concept of the HQ–subsidiary dyad being externally embedded and derive propositions on how this more holistic concept of MNC embeddedness influences subsidiary contribution.

Findings – We argue that subsidiary contribution depends not only on the relational embeddedness dimension of the subsidiary but that there is a complex interplay between several embeddedness dimensions on multiple levels. We suggest that the much emphasized effect of subsidiary relational embeddedness might be contingent on the HQ's own relationships, and the structure of the overall network. We also develop propositions which show that subsidiary relational embeddedness mediates the relationship between overall network structure and subsidiary contribution.

Research limitations – For the sake of theoretical stringency, we keep other influencing factors such as MNC strategy and specific subsidiary mandates as constant.

Originality/value of the chapter – Subsidiaries are an important source of firm-level competitive advantage. Subsidiary resources have also been shown to develop to a large extent in relationships with external actors. Despite this importance, we argue that our understanding of how the MNC is embedded in external networks and how this in turn influences subsidiary contribution is limited. This chapter attempts to make a first step into filling this gap.

Many studies have focused on the effects of MNC subsidiaries’ external relational embeddedness. Little attention has been given to its antecedents and especially to the potential effect that the business network context might have. We try to fill this gap and attempt to explain variation among subsidiaries’ degree of relational embeddedness. Our results show a strong and robust effect of the business network context - i.e. the network context in which the direct business relationships between the subsidiary and its partners are embedded - on the degree of relational embeddedness. However, contrary to previous literature, we find an inverted u-shaped relationship. We discuss our findings with regard to the issue of over-embeddedness and the literature on the strength of weak versus strong ties.

MNCs have been conceptualized as differentiated networks that, in turn, are embedded in external networks. Previous research has predominantly focused on the embeddedness of established subsidiaries into their local environment, omitting to shed light on the phenomenon of headquarters linkages to the local context which creates embeddedness overlap. We develop a model of why MNCs develop overlapping linkages to local subsidiary networks even if the subsidiaries have grown out of the initial start-up phase. Using detailed information on 168 European subsidiaries, we find that MNCs build and maintain more overlapping network ties when subsidiaries are high performers, hold important resources, operate in turbulent environments, and are closely connected to multinational actors as opposed to purely domestic firms.

We apply information processing theory and research on regional units to investigate the evolution of regional management. Based on a longitudinal case study of a European multinational we capture the overall structural development of the firm and within this context, we conduct an in-depth analysis of two regions and their regional management centres.