Parenting advantage in the MNC: An embeddedness perspective on the value added by headquarters

Abstract

What determines the value an MNC’s headquarters adds to its own affiliates? In this paper, we shed light on this question by linking the embeddedness view of the multinational corporation to the literature on parenting advantage. We test our hypotheses on an original dataset of 124 manufacturing subsidiaries located in Europe. Our results indicate that the external embeddedness of the MNC is an antecedent to headquarters’ value creation. We find that headquarters’ investments into their own relationships with the subsidiaries’ contexts are positively related to the value added by headquarters. Furthermore, this relationship is stronger when the subsidiary itself is strongly embedded. We discuss implications for the MNC literature, embeddedness research, and the literature on parenting and headquarters’ roles.

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