Knowledge-intensive business services: does dual embeddedness matter?

Building on network theory, this study investigates knowledge development in subsidiaries in the knowledge-intensive business service (KIBS) sector. Foreign subsidiaries’ internal and external networks are divided into three main categories: relations with (1) the local environment (external embeddedness), (2) parent firms (subsidiary--parent firm embeddedness and autonomy), and (3) sister subsidiaries (subsidiary--subsidiary embeddedness). Hypotheses are tested using a sample of 184 subsidiaries, located in the UK, whose parent firms are based outside the UK. While our results indicate that external embeddedness, subsidiary--parent embeddedness, and autonomy are main determinants of knowledge development within KIBS multinational companies, they show no association between subsidiary--subsidiary embeddedness and knowledge development.