Embeddedness, Ownership Mode and Dynamics, and the Performance of MNE Subsidiaries

Whereas researchers have provided profound empirical evidence for the direct relationship between subsidiary embeddedness and subsidiary performance, we intend to investigate the dependence of this relationship on firm-specific contingency factors. Specifically, we propose that the effects of internal and external embeddedness on performance are contingent on ownership mode and the past change of such mode. We find a positive moderating effect of changes in ownership mode on the relationship between external and internal embeddedness and subsidiary performance. The empirical results support our reasoning that dynamic learning routines realized in situations of organizational change positively affect the efficacy for external and internal resource access for subsidiaries. The contingency perspective of our study provides further support for IB research to avoid one-size-fits all statements but rather to consider the volatile internal and external parameters that determine MNEs' business.