Knowledge-intensive business services: does dual embeddedness matter?

Building on network theory, this study investigates knowledge development in subsidiaries in the knowledge-intensive business service (KIBS) sector. Foreign subsidiaries’ internal and external networks are divided into three main categories: relations with (1) the local environment (external embeddedness), (2) parent firms (subsidiary–parent firm embeddedness and autonomy), and (3) sister subsidiaries (subsidiary–subsidiary embeddedness). Hypotheses are tested using a sample of 184 subsidiaries, located in the UK, whose parent firms are based outside the UK. While our results indicate that external embeddedness, subsidiary–parent embeddedness, and autonomy are main determinants of knowledge development within KIBS multinational companies, they show no association between subsidiary–subsidiary embeddedness and knowledge development.