The Dual External Embeddedness of Geographically Distributed R&D

We develop the conjecture that an R&D subsidiary can embed itself in the science base of the home country

(more closely controlled by the parent) and/or the science base of the host country, depending upon the type of

R&D it is mandated to perform, the threat of R&D leakage, strategic considerations of rival firms, and the

characteristics of the host country's business environment and scientific endowments. We test these conjectures

on data obtained from 76 R&D subsidiaries in 14 international locations. Both types of external embeddedness

are important and complementary. Global competitors and location specific advantages have determine the

extent of host country embeddedness, but location specific disadvantages, geographical proximity to the parent

and relative autonomy in subsidiary operations favour external embeddedness in the parent country networks.