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Internal Embeddedness, Headquarters Involvement, and Innovation Importance in Multinational Enterprises
Author(s) -
Ciabuschi Francesco,
Dellestrand Henrik,
Martín Oscar Martín
Publication year - 2011
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2011.01014.x
Subject(s) - embeddedness , multinational corporation , business , subsidiary , context (archaeology) , industrial organization , perspective (graphical) , structural equation modeling , competitive advantage , marketing , business administration , sociology , paleontology , statistics , mathematics , finance , artificial intelligence , anthropology , computer science , biology
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.