The interplay between subsidiary internal embeddedness and strategic options: evidence from top information technology multinational enterprises

Extending subsidiary embeddedness and strategy literature, we conceptualise the role of subsidiary ‘multiple’ internal embeddedness in determining different subsidiary strategic options. Building on the notion of ‘structural’ embeddedness found in prior research, we distinguish three levels of ‘internal’ subsidiary embeddedness (corporate, network, and self-reliant) using measures of hierarchy. We also identify three types of subsidiary strategy (horizontal integration, lateral integration, and diversification) in the context of information technology (IT) Multinational Enterprises (MNEs) to examine in-depth whether and how levels of internal embeddedness interacts and leads to distinctively different subsidiary strategies. Subsequently, we offer a conceptual model, at the subsidiary level, to illustrate how these relationships are interplayed, based on a sample of 1866 subsidiaries of the eight largest global IT MNEs across four continents (Europe, North America, Asia, and Africa). Subsidiary location is also found to be an important moderator of the interplay. Implications for future research on the relationship between multiple subsidiary internal embeddedness and subsidiary strategies are discussed and managerial implications are outlined.

© The Author(s). Reproduced with permission of Academy of International Business