The configuration of employee retention practices in multinational corporations’ foreign subsidiaries

This paper contributes to turnover research by deriving a typology of retention practices and investigating their applicability in multinational corporations’ (MNCs) foreign subsidiaries in the light of home- and host-country effects. Linking institutional and strategic HRM perspectives, the paper then proposes a conceptual framework examining how MNCs can maximize their retention capacity. Specifically, MNCs need to align their transferable home-country retention practices with overall strategy and complement them with flexible context-specific practices to allow for adaptability across different subsidiaries. It is further argued that characteristics of the headquarters–subsidiary relationship will influence the relative importance of context-generalizable versus context-specific retention practices and that the relevant set of practices for each subsidiary then needs to be configured individually.     

Efficiency of multinational banks: Impacts of geographic and product loci

This paper explores geographic diversification strategies’ impact on multinational banks’ operational performance within the context of research on globalization and regionalization. We employ a sample of the 49 largest banks from 16 European countries from 2011 to 2018 and proxy operational performance by technical efficiency. We find the impact of geographic diversification on operational performance depends on the locus of geographic diversification—home-regional vs. inter-regional—and the interplay between geographic diversification and banks’ functional focus. More specifically, home-regional diversification together with a concentration on non-interest income-generating activities, including fee and commission and trading income, worsens performance, and diversification across regions alongside a focus on non-interest income-generating activities improves performance. Distinct product characteristics’ ability to facilitate different regional dispersions has important managerial implications for enhancing the success of geographic diversification strategies, a central but unresolved issue in global banking.     

The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary’s business network

Within business literature in general, capabilities have advanced to the prime determinant of the corporation’s economic rents. Within international business literature, it is further assumed that multinational corporations can enhance their pool of capabilities through foreign subsidiaries. Foreign subsidiaries are seen as means to assimilate new capabilities from their local, external network and integrate these capabilities into the multinational corporation. Data from more than 2000 foreign subsidiaries shows that some foreign units actually are endowed with superior capabilities which are useful for other corporate entities. It is argued that the development of critical capabilities within these subsidiaries is driven not only by internal corporate actors, but also by external actors. The analysis provides evidence that the role of different internal and external network partners for capability development varies according to the functional activity under consideration. Thus, subsidiaries benefit from various internal and external network actors in very different ways. The contribution ends with some conclusions and some avenues for future research.     

Sources of open innovation in foreign subsidiaries: An enriched typology

This paper analyzes the drivers of multinational affiliates’ innovation, using a dataset based on the Community Innovation Survey for Belgium. Specifically, we investigate the role of external knowledge sources on foreign affiliates’ research efforts and innovation. We thereby develop an enriched typology by taking both the MNC and the host country perspective into consideration and distinguish between different types of subsidiaries, in order to disentangle differences in the use of knowledge sources between technology exploiting, seeking and creating subsidiaries. Our findings show that technology-creating foreign affiliates are able to tap into a combination of industry-based value chain partners and science-based partners. In particular, a combination of clients and universities have a powerful impetus on the research effort of technology creating firms. Our results also indicate that technology-seeking subsidiaries make more use of collaboration with competitors. Technology exploiting subsidiaries make significantly less use of external knowledge sources and have a lower R&D intensity.     

SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation

Firms’ foreign market entry mode choice attracts considerable research attention. However, the performance implications of this choice remain inconclusive, particularly in the context of small and medium-sized enterprises (SMEs). The present paper draws on the resource-based view (RBV) and develops a theoretical model specifically tailored to the context of SMEs in order to study the relationship between entry mode choice and foreign venture performance. Testing hypotheses on 133 German SMEs, we show that international experience as a resource and product adaptation as a capability improve the performance of non-equity entry modes by mitigating liabilities of smallness inherent to SMEs. We furthermore find empirical support for the joint moderating effect of international experience and product adaptation on the focal relation. Our findings contribute to the SME foreign market entry mode literature and have implications for practitioners and future research.     

Willingness to work for multinational enterprises from emerging countries: The case of Chinese multinational enterprises in the Netherlands

How do perceptions of country-of-origin image (COI) relate to willingness of Western people to work for subsidiaries in advanced countries of multinational enterprises from emerging countries (EMNEs)? We seek to shed light on this question by exploring six hypotheses based on environment-processing metatheory. Applying a PLS-SEM analysis of online survey data from the Netherlands, we find that the COI and familiarity with the EMNE’s home country are positively associated with willingness to work. Additionally, we reveal a few mediating effects indicating that familiarity and individual difference are indirectly related to willingness to work. This study contributes to our understanding of the inability of EMNEs to attract talent in the Western world by adding a macro perspective to the human resource management literature. Furthermore, we extend environment-processing metatheory by expanding the focus from the perceived internal context (corporate information) to the perceived external environment (country of origin), as well as to the antecedents (familiarity and individual differences) of the perceived environment.     

Export intensity of foreign subsidiaries of multinational enterprises: The role of trade finance availability

We examine the relationship between the role of trade finance availability and the export intensity of foreign subsidiaries of multinational enterprises (MNEs). In developing our hypotheses, we draw upon insights derived from “new” internalisation theory (international business literature) and international trade finance (international economics literature). We empirically test these hypotheses using survey data compiled from subsidiary managers in six ASEAN countries, supplemented with host-country level data. We conceptualise, empirically test, and establish that the subsidiary-level capability in combining and utilising internal and external debts is an important subsidiary-specific advantage to support export intensity. We find that subsidiaries employ intra-firm loans from MNE internal capital markets and, to some extent, bank loans from external financial institutions to boost their export intensity. Subsidiaries may have concerns about foreign exchange risks, but the use of appropriate foreign exchange risk management is positively associated with export intensity. We discuss the implications of our findings for theory and practice.     

Location choices of multinational firms in Europe: The role of EU cohesion policy

Using data on 5509 foreign subsidiaries established in 50 regions of 8 EU countries over the period 1991-1999, we estimate a mixed logit model of the location choice of multinational firms in Europe. In particular, we focus on the role of EU Cohesion Policy in attracting foreign investors from both within and outside Europe. We find that, after controlling for the role of agglomeration economies as well as a number of other regional and country characteristics and allowing for a very flexible correlation pattern among choices, Structural and Cohesion funds allocated by the EU to laggard regions have indeed contributed to attracting multinationals. These policies as well as other determinants play a different role in the case of European investors as opposed to non-European ones.     

Foreign subsidiaries as vehicles of industry 4.0: The case of foreign subsidiaries in a post-transition economy

We ask whether foreign subsidiaries may work as entities that neutralize the threat of marginalization of the post-transition economies in terms of Industry 4.0 (I4.0) adoption. Building on a conceptual model of foreign subsidiaries as I4.0 vehicles, we conducted interviews with 440 foreign subsidiaries from the manufacturing sector established in Poland. The originality of the paper concerns three key issues. First, our study shows that the strategy adopted by the headquarters is critical, as it impacts the possibility of foreign subsidiaries to act as vehicles of I4.0 transformation in host economies. Second, embeddedness in local environment guarantees the transition of knowledge, whereas the innovation capacity of a foreign subsidiary does not seem to play any role. Third, we focus on foreign subsidiaries established in a post-transition economy. The results of our research enrich the literature on types of foreign subsidiaries in transmitting and diffusing the knowledge received from headquarters and expose the prominent role of links with host market entities.     

The impact of MNE cultural diversity on the internationalization-performance relationship: Theory and evidence from European multinational enterprises

Prior work has established the importance of degree of internationalization for understanding the performance of multinational enterprises. Despite all efforts, however, the relationship between degree of internationalization and firm performance (I-P) is still the subject of ongoing debate following inconclusive findings. We suggest that the international business literature has largely overlooked MNE cultural diversity as an essential determinant of the I-P relationship. We argue that the impact of the degree of internationalization on MNE performance is contingent on MNE cultural diversity. The impact of the degree of internationalization on performance is positive for MNEs that operate in culturally similar countries and negative for MNEs that operate in culturally diverse countries. Our study is among the first to examine the impact of MNE cultural diversity on the I-P relationship with a unique panel dataset from European multinationals. The results provide convincing support for our approach to the study of the degree of internationalization and MNE performance.     

The role of consumers' construal level in art-infusion-type effect on retail product evaluation

What cognitive characteristic of consumers directs the art-infusion-type effect? This study inspected the impact of art-infusion type on product attitude through aesthetic judgment under different construal levels. This study was underpinned by “construal level theory” and “the model of aesthetic appreciation and aesthetic judgments.” The data were collected from a pretest (N = 280) and an experiment (N = 388). A moderated-mediation analysis displayed that to low-construal consumers, infusing figurative (vs. abstract) artwork into retail products elicits greater aesthetic judgment, leading to more favorable product attitudes. However, to high-construal consumers, such an effect did not occur. These results broaden the past art-infusion research by corroborating the existence of art-infusion-type effect and presenting the construal level as its new boundary condition. Furthermore, our results offer practical insights into utilizing artworks in product promotion.     

eHRM adoption in emerging economies: The case of subsidiaries of multinational corporations in Indonesia

Electronic HRM (eHRM) is assumed to strengthen the position of HRM as a business partner by promising strategic benefits. Empirical support for this assumption, however, mostly comes from studies conducted in developed economies. Yet eHRM adoption in the emerging economy context remains poorly understood as is how eHRM can result in strategic benefits. We argue that the difference between an emerging economy compared to that of a developed economy affects the adoption of eHRM in multinational corporation (MNC) subsidiaries. In order to investigate which extrinsic factors of a firm in an emerging economy context play a role in the adoption of eHRM, we conducted semistructured interviews in 11 subsidiaries in Indonesia. We found that headquarters’ influence and the available resources have a strong influence on eHRM adoption in Indonesia. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

A study of the impact of Corporate Social Responsibility and price image on retailer personality and consumers' reactions (satisfaction,trust and loyalty to the retailer)

This study investigates the impact of a retailer's Corporate Social Responsibility (CSR) policy and its price image on retailer personality, along with the impact of these two variables on the consequences of retailer personality: consumers' satisfaction, trust and loyalty toward the retailer (measured by their attitude and future behavioral intentions). Data were collected on a convenience sample of 352 consumers of a French grocery retailer. Using Partial Least Squares analysis (PLS), we show that perceived Corporate Social Responsibility and price image have a significant positive/negative influence on retailer personality traits (“agreeableness” and “conscientiousness”/“disingenuousness”) and that Corporate Social Responsibility has also a significant positive influence on the “sophistication” personality trait. For the consequences examined (satisfaction, trust and loyalty to the retailer), we show that Corporate Social Responsibility, price image and retailer personality have a direct or indirect impact on these dependent variables.     

A contingent approach to country-of-origin effects on foreign products evaluation: Interaction of facets of country image with product classes

This study investigates the effect of country-of-origin image on consumers’ evaluations of foreign products and disaggregates the effects across facets of country image and across product classes. We disentangle country image into cognitive and affective dimensions, and additionally disaggregate the cognitive dimension into geographic and human aspects. We posit that country-of-origin effects will vary across distinct facets of country image and that the effect of each facet of country image will vary across different classes of products. By means of an online survey, data were collected from French consumers regarding their perceptions of cognitive and affective aspects of two countries – Brazil and Germany – and their evaluation of three product classes – utilitarian nature-based, utilitarian industrialized and hedonic industrialized – which were represented respectively by fruits, home appliances and clothes. Empirical results partially corroborate the hypothesized contingent impacts.     

Lessening the divide in foreign subsidiaries: The influence of localization on the organizational commitment and turnover intention of host country nationals

The retention of host country nationals (HCNs) has become a key challenge for many foreign subsidiaries of multinational enterprises. This study examines whether localization, the replacement of expatriates with HCNs, could serve as a counter-strategy to increase the organizational commitment and reduces the turnover intention among HCNs. Based on social identity theory, we have developed a model to explain the heterogeneous nature of this influence on HCNs depending on different individual-level characteristics, e.g., gender, educational level, organizational tenure, and managerial position. Survey results from 197 Chinese white-collar employees showed that localization increases organizational commitment, which in turn reduces their turnover intention. This tendency was the strongest among male and highly educated employees. Practical and theoretical implications are further discussed.     

The influence of CEO overconfidence on ownership choice in foreign market entry decisions

Prior research on foreign-market entry determinants offers various firm-, industry-, and market-level explanations. Yet, few studies consider the subjective psychological attributes of the executives making actual decisions. Based on behavioral decision theory and the psychology literature, this study provides the first empirical evidence of the influence of managerial overconfidence on ownership decisions into foreign markets. The results show that CEOs’ tendency toward overconfidence increases the propensity for full over shared ownership, where their positive relationship is more pronounced when firms are exposed to greater information asymmetry or environmental uncertainty, in terms of greater home-host cultural and institutional distances, higher host-country risks, and inexperience in the local market. A powerful board weakens this positive relationship, but does not diminish the effect completely. The results hold with overconfidence measures based on both CEOs’ actual actions and public opinions. Our findings complement extant entry-mode decision literature by highlighting the imperative to incorporate firm leaders’ psychological biases.     

The impact of corporate behavior on perceived product value

This research examines how ethical and unethical corporate behavior influence the perceived value of a firm's products, operationalized as the price consumers are willing to pay for that product relative to the competition. We propose that if consumers expect companies to conduct business ethically, then ethical behavior will not be rewarded but unethical behavior will be punished. The results of the first study confirm this expectation. The second study explored ways a firm can improve the perceived value of its products after an unethical act has been committed. Our results indicate that after a firm has committed an unethical act, consumer's perceptions of that company and its products were positively influenced by ethical behavior, corporate philanthropy, and cause-related marketing. However, our analyses revealed that these different strategies varied in their effectiveness. The third study used a choice task, rather than a judgment task, to confirm the finding that corporate behavior does influence perceived product value and is therefore likely to influence market choices. The implications of these findings are discussed.     

The effect of firm scale and CSR geographical scope of impact on consumers' response

The role of corporate social responsibility (CSR) in shaping consumer perception and attitude has received many attentions both in the academia and practitioner world. While this domain has invited numerous research, but research highlighting how consumers react toward learning the size of a firm conducting CSR and geographical scope of the CSR impact is still scarce. We investigate how consumers shape their attitude and consumption behavior after knowing that the CSR action is done by a small, locally-owned business that brings impact to the local community through an experimental study. Our study adds a shade in understanding how the effect of a firm size and geographical scope of CSR impact might increase consumers' favorable attitude and behavior toward the business and its products. Our findings show that when consumers learn that the firm conducting CSR is a small, locally-owned (in coffee shop business) that directs its action toward local beneficiaries, they demonstrate more favorable attitudes toward the action and the firm, which manifest in the form of better intentions to acquire the product as well as willingness to pay premium prices for it. Our findings confirm the US consumers' love affair with local businesses, in particular. While the findings generally benefit small, locally-owned businesses, they also suggest recommendations for large, multinational businesses to design their marketing strategy in an attempt to increase favorable reactions from consumers.     

What's inside matters: The impact of ingredient branding on consumers' purchasing behaviours in services

Ingredient branding has been widely used as a marketing strategy to create added value and enhance market competitiveness in a variety of durable and non-durable product categories. Despite its prevalence in practice, current research into ingredient branding offers little guidance for the services sector and is, in any event, limited to studies that analyse intentions rather than actual behaviours. This paper contributes to the literature by using scenario-based and field experiments to examine the impact of ingredient branding on consumers' purchasing behaviours in a service context. The scenario-based experiments highlight the mediating role of quality perception on willingness to pay, which increases by up to 9 % for a food item that is ingredient branded. The results of the field experiment show that the actual sales of an item increase by 40 % when it is ingredient branded. Consequently, this paper provides both theoretical and managerial insights into the favourable impact of ingredient branding on consumers’ purchasing behaviour. This paper concludes by proposing an agenda for future research.     

The impact of market orientation on product innovativeness and business performance

The paper reports a study of the impact of market orientation on business performance. The use of product innovativeness is proposed as a mediator of the influence of market orientation on business performance. Product innovativeness is defined along two dimensions: use of new-to-the-firm and use of new-to-the-market products. Business performance was represented by relative price premium, sales growth, capacity utilization, and profitability. The findings provide support for the positive influence of market orientation on both dimensions of product innovativeness. However, only use of new-to-the-market products turns out to be a positive contributor to business performance.