The effects of relational embeddedness on entrepreneurship : Taiwanese subsidiaries in China

Purpose – The purpose of this paper is to investigate the effects of relational embeddedness on entrepreneurship in Taiwanese subsidiaries in China that are facing an uncertain and emerging environment. Design/methodology/approach – First, four case studies are conducted to modify theoretical concepts and measuring instruments to fit them into the entrepreneurial context of multinational subsidiaries in a transitional economy. In the second stage, a survey is conducted to examine the associations between relational embeddedness and subsidiary entrepreneurship. A total of 265 executive officers, which is approximately 29 percent of 922 managers in the mailing list, reply to the questionnaire on their subsidiaries. Findings – This study finds that subsidiary entrepreneurship has an inverse U‐shaped relationship with regards to customer or supplier relational embeddedness, a positive relationship with corporate relational embeddedness and no relationship with government relational embeddedness. Originality/value – Based on this study of Taiwanese subsidiaries operating in China there is an inverse‐U‐shaped link between relational embeddedness and customers and suppliers. Hence, this study confirms that over‐embeddedness with customers or suppliers negatively influences subsidiary entrepreneurship.