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Research Summary This paper examines an understudied aspect of network relationships—that is, direction of relational ties. Tie direction is important since it can shape when and how firms can benefit from the international experience of other firms. We focus on a specific type of network relationship—that is, interlocking directorates, which provides a clinical context to study directionality. We show that, due to their higher familiarity, identification, and executive power, focal firm directors serving in other firms' boards (i.e., outgoing ties) are more beneficial for utilizing partners' international experience. However, outside directors sitting on the boards of focal firms (i.e., incoming ties) can bring more useful first-hand experience and facilitate international expansion once these ties get stronger. Theoretical and practical implications of these results are discussed. Managerial Summary As they grow internationally, firms need to manage risks and uncertainties of doing business abroad. In this regard, they can potentially benefit from the international experience of other firms in their network. We show how firms can realize these benefits by means of interlocking ties (i.e., shared board memberships). To that end, we examine the directionality of interlocking ties. Specifically, we argue that a firm's ability to utilize partners' experience for its own international expansion is greater when its directors sit on the boards of other firms (so-called outgoing ties) compared to when other firms' directors sit on its own board (so-called incoming ties). However, experience coming through incoming ties is more effective for a firm's international expansion once these ties get stronger.

International diversification is a fundamental pillar of multinational corporations' (MNCs) growth strategies. Consequently, there is a considerable body of research on the performance implications of MNCs' international diversification strategies. We extend this literature by adopting a relational view where we compare the diversification profiles of firms in an inter-organizational context. We argue that the relative characteristics of firms' and their partners' diversification profiles is an indicator of parties' resource bases and thereby can explain if and when inter-organizational ties yield optimum performance outcomes. We examine these relative characteristics and propose a conceptual refinement by differentiating between the degree and content dimensions of international diversification. Analyzing data from 202 manufacturing firms from the S&P 500 list, we find that firms achieve optimum performance when their partners have moderately higher degrees of international diversification and a moderate overlap of presence in foreign markets.

It is well known that Chinese multinationals’ international expansion is often supported by the home-country government. This study argues that the political embeddedness of Chinese multinationals’ headquarters may impair their managerial intentions and abilities to carry out their entrepreneurial and administrative roles and, indirectly, their capacity to achieve reverse knowledge transfers from their foreign subsidiaries. Based on a study of 177 subsidiaries of 99 Chinese multinationals, we find no support for the argument that political embeddedness affects headquarters’ centralization of subsidiary decisions, although such centralization is negatively associated with reverse knowledge transfer. Additionally, our findings show that home-country political embeddedness is negatively associated with headquarters’ entrepreneurial role vis-à-vis individual subsidiaries. This hampers subsidiaries’ reverse knowledge transfers. The results contribute to understanding the value of political embeddedness and headquarters’ roles in the context of Chinese multinationals. They also provide insights into the strategic asset-seeking internationalization of Chinese multinationals. By developing and operationalizing the multidimensional concept of political embeddedness, this study further contributes to the research on firm-government relations.

Although received research emphasizes direct experiential knowledge as a key driver of firms' internationali-zation, the role of indirect experience has been increasingly recognized in recent studies. In this paper, we extend these studies by examining the role of source and context of experiential knowledge in relation to firms' internationalization into specific host markets, and offer a fine-grained analysis of when and how indirect experience complement or substitute direct experience. We test our hypotheses with data from 1,478 Swedish SMEs. Our results reveal that a firm can address its knowledge gaps and increase its extent of internationalization into a host market by combining direct and indirect experience, especially when they yield different types of knowledge needed for internationalization. We further show that direct and indirect experience derived from comparable contexts could substitute for each other but may also create knowledge redundancies.

In the beginning of the twenty-first century, Andersson, Forsgren, and Holm (2001, 2002) published two highly cited articles on the relationship between network embeddedness and the evolution of multinational enterprise (MNE) subsidiary roles. These articles paved the way for research examining the importance of market knowledge acquired by an MNE subsidiary through being embedded in local networks, which would, in time, be expected to positively influence the competence development of other MNE units. The present chapter presents an overview of the key contributions of these seminal papers, followed by a discussion about the theoretical and empirical advancements concerning the relationship between embeddedness and subsidiary competence development. We provide suggestions around how to conceptualize competence development and knowledge transfer in relation to subsidiary external embeddedness and highlight areas where more research is needed.