A subsidiary’s influence within the federative MNC: The case of multinational KIBS firms

Building on network view and knowledge based view; this research investigates how relationships (with local actors, parent firm, and local actors), knowledge development, and reverse knowledge transfer impact on the extent to which a subsidiary can exert influence on strategic decisions of its MNC. The proposed model was tested with data on 184 subsidiaries activating in the KIBS sector in the United Kingdom. The results indicate that the extent of the subsidiary’s influence on strategic decisions of the MNC is significantly related to the extent to which the subsidiary contributes to the knowledge based of its parent firm. We also find that knowledge development and subsidiary-parent firm embeddedness can only indirectly augment the extent of subsidiary’s influence through facilitating reverse knowledge transfer. The association between external embeddedness and influence is also mediated by knowledge development and reverse knowledge transfer.