Working Papers,
Copenhagen Business School, Department of International Economics and Management

Abstract: There has been a growing interest in looking upon the MNC as a differentiated network in the sense that subsidiaries have access to different types of resources and therefore perform differently in its market-place and within the MNC. Yet, even though subsidiaries are the object of intense interests, remarkably little have been written about assessment of subsidiary performance. In short, the possibilities of subsidiaries seem to generate more attention in the literature than their results. The two distinctive features of this paper lie in the development of the concept of subsidiary performance and the exploration of the linkage between subsidiary embeddedness and performance. More specifically, by drawing on literature about organizational learning, absorptive capacity and embeddedness in business relationships, some hypotheses will be formulated about the casual link between subsidiary environment and subsidiary performance. The hypotheses are tested in an LISREL-model based on data of 98 subsidiaries belonging to Swedish multinationals.

Keywords: MNC; subsidiaries; Sweden

32 pages, May 29, 1999

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