The impact of subsidiaries’ internal and external integration on operational performance

What is it about?

Subsidiaries of multinational companies (MNC) are members of two distinct networks: (1) the internal network of subsidiaries within the MNC, and (2) the external supply chain network of suppliers and customers. In this paper we investigate how a subsidiary can improve its performance by using the knowledge residing in the internal network of the MNC. It is put forward that this knowledge is only useful if the subsidiary cooperates with external supply chain partners as well, creating the opportunity to share and combine this knowledge with the knowledge of supply chain partners.

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Why is it important?

The paper shows that the dual embeddedness (i.e. being simultaneously integrated into the internal and external knowledge flows) can significantly improve the operational performance of a manufacturing subsidiary.