• The Determinants and Consequences of Subsidiary External Embeddedness

Abstract

This study investigates how foreign subsidiaries’ external embeddedness comes from and how it relates to the subsidiary importance. Using detailed questionnaire on 229 subsidiaries of multinational enterprises in Taiwan, our analysis revealed three significant findings. First, the headquarters’ internationalization strategy and resource gap have the positive effect to subsidiary external embeddedness. Second, external embeddedness is also related positively to the subsidiary importance. Third, subsidiary’s bargaining power is caused positively by external embeddedness, but subsidiary importance have no significant effect from subsidiary’s bargaining power. Overall, our results provide strong evidence that the internal linkage to subsidiary external embeddedness facilitates subsidiary bargaining power and importance.

Keywords: Multinational Enterprise, Subsidiary, External Embeddedness, Subsidiary Importance