Seminar by Stefania Małgorzata Lewandowska

13.12.2017

The influence of subsidiaries’ internal and external relationships on innovation-related competitive advantage. Evidence from selected European Union countries

Seminar by Stefania  Małgorzata Lewandowska, Warsaw School of Economics.

Subsidiaries participate in two separate networks: in the internal (corporate) network of the company embracing headquarters and other subsidiaries, and in the external (inter- organisational) network of cooperation partners, both domestic and foreign. Based on the concept of “dual embeddedness” this paper proposes a model explaining the role of internal and external relationships in building of innovation-related competitive advantage. Path analysis based on the Community Innovation Survey 2010-2012 sample of enterprises – members of capital groups from 10 EU members states, mostly CEE (post)- transition countries is conducted. The results provide evidence of positive influence of dual embeddedness on subsidiaries innovation leading to competitive advantage based on cost as well as on differentiation. Mediating role of external knowledge in the link of internal integration and competitive advantage is put forward. Thus, external and internal relationships are not mutually exclusive, but on the contrary, while together, reinforce their influence on innovation performance. The results also show, that internal integration has the decisive role in building the innovation-related competitive advantage based on cost, whereas external relationships have stronger influence on the competitive advantage based on differentiation. This leads to the conclusion, that subsidiaries’ management should promote both types of relationships considering their distinct roles in the process of building competitive advantage.