Subsidiary Embeddedness is a Strategic Choice: Complementarity and the factors associated with different types of embeddedness

We conjecture that the Research and Development (R&D) subsidiary of a Multinational Enterprise (MNE) can be potentially embedded in three different networks viz. the science base of the home country, the science base of the host country, and/or the internal knowledge network of sister subsidiaries and parent MNE. We explore the type of relationship (complementary or substitutive) that exists between the three networks. Further, we develop a set of hypotheses about the factors that are associated with each form of embeddedness. We test these conjectures on data obtained from internationally located MNE R&D subsidiaries. We find that the three types of embeddedness are complementary to each other and the factors associated with each kind of subsidiary embeddedness are different.