U.s. Multinational staffing practices and implications for subsidiary performance in the u.k. And thailand

This study addresses two questions about the U.K. and Thai subsidiaries of U.S. multinationals: (1) What is the relationship between a company's staffing policy and subsidiary performance? and (2) When are companies more likely to use an expatriate rather than a local manager? The study concludes that local managers are most effective in subsidiaries located in a developing country, subsidiaries that rely on a local customer base, and subsidiaries with marketing themes similar to the themes used at their U.S. headquarters. Expatriates are more likely to be in charge of larger subsidiaries and those with a marketing theme similar to that of the headquarters. ? 2001 John Wiley & Sons, Inc.     

The liability of closeness: Business relatedness and foreign subsidiary performance

It is widely accepted that business relatedness, defined as the extent to which a foreign subsidiary is related to its parent's core business, has a positive effect on subsidiary performance. With a sample of 165 Japanese subsidiaries located in China, however, we found that modestly related subsidiaries, on average, outperformed both unrelated and closely related subsidiaries, and that closely related subsidiaries performed poorly especially when the parent had a heavy majority ownership in the subsidiary and the subsidiary was at its early stage of operating in the host market. Our results indicate that being too closely related to the parent could be potentially detrimental, suggesting a liability of closeness.     

Organizational acculturation in foreign subsidiaries

Organizational acculturation refers to the influence of parent organizational culture resulting in change of work values of local employees in foreign subsidiaries. A study of host country national middle managers in Southeast Asia explored the impact of organizational acculturation. In the first phase, the work-related cultural values of managers employed by Swedish subsidiaries in Singapore were compared with those of a control group of managers employed by non-Swedish companies. The second phase investigated the work values of managers in Hong Kong, Singapore, and Thailand, based on Hofstede's four cultural dimensions. The findings clearly indicated that local managers in Swedish subsidiaries had experienced organizational acculturation, as distinct Swedish values had been adopted. However, cultural change did not occur to an equal extent among the three countries nor between different cultural values. Implications of the findings for international human resource management are discussed. © 1993 John Wiley & Sons, Inc.     

The drivers of evolution/upgrading in Mexico's maquiladoras: How important is subsidiary initiative?

Corporate entrepreneurship may play an important role as a driver of industrial upgrading in multinational subsidiaries. In this study, we test to determine if subsidiary initiative is related to industrial upgrading in a sample of 50 Mexican maquiladoras. Based on qualitative and quantitative data collected from plant managers, this study provides qualified support for the notion that increased responsibilities within MNC networks are something earned through the entrepreneurial efforts of subsidiary managers rather than given by the parent company.     

Do Mexican Companies Culturally Adapt Their Websites?

Although some articles have tried to address the standardization/adaptation strategies of companies on the internet, there is still a lack of guidance on the issue, especially for companies outside of the United States. To help alleviate this shortage of guidance and provide Mexican web designers, web marketers, and IT managers with some insights into web cultural adaptation, this article conducted a comparative analysis of Mexican based companies’ domestic websites and their U.S. international websites, replicating a cultural adaptation framework from prior literature. Thirteen Mexican based Bolsa Mexicana de Valores (2005) companies were evaluated to test for the cultural adaptation of their Mexican and international websites. A content analysis of 26 Mexican domestic and U.S. international websites reveals non-significant cultural adaptation on the web; however, the results of the web content analysis are similar to those of previous research, which consider Mexican culture to score high in power distance, uncertainty avoidance, masculinity, and high-context cultural dimensions. However, for the collectivistic dimension, the results were opposite to those of previous research, which may suggest a need to develop and test other cultural adaptation frameworks for future research.     

Performance of foreign direct investment from Singapore

This study was conducted with two broad aims: to assess the performance levels attained by foreign direct investment (FDI) undertaken by Singapore firms and to identify the key determinants of the performance levels attained. We employed a broad set of perceptual measures, as reported by the MNC parent managers, to assess the performance of foreign subsidiaries. The measures included: stability, profitability, overall success, market share and sales growth. We hypothesized that the performance of (FDI) will be influenced by the following factors: mode of entry, cultural distance, relative size of the subsidiary and host government attitudes. Based on an analysis of 128 responses to a survey, we find that Singapore firms’ foreign subsidiaries achieve moderate levels of performance. The data analysis also revealed that FDI performance was positive under the following conditions: the host government attitudes were positive and the subsidiaries were of large size relative to the parent.     

Does parenting matter in subsidiary innovation in emerging economies? Exploring the role of parent superior competitiveness in affecting subsidiary contextual ambidexterity

Parenting in the multinational enterprises (MNEs) creates a dilemma when parent company manages the subsidiary contextual ambidexterity, in which parent superior competitiveness may nurture subsidiary exploitation while inhibit exploration. This study addresses this dilemma by developing an integrated framework and investigating how parent superior competitiveness affects the subsidiary contextual ambidexterity (innovation initiative and motivation of learning from the parent), which in turn increases subsidiary innovation performance. Furthermore, it is also examined that what tactics subsidiaries should take to resolve the dilemma. Using 296 survey responses from multiple informants of 111 subsidiaries in China, we find that parent superior competitiveness hinders subsidiary innovation initiative, but enhances subsidiary motivation of learning from the parent company. The negative effect of parent superior competitiveness on subsidiary innovation initiative becomes weaker when the strengths of subsidiary external tie and parent-subsidiary communication are enhanced. The positive effect of parent superior competitiveness on subsidiary motivation of learning is strengthened by subsidiary external tie, whereas no significant effect is found of parent-subsidiary communication. In addition, subsidiary innovation initiative contributes to subsidiary innovation performance through knowledge exploration and subsidiary motivation of learning from the parent positively affects innovation performance.     

Composing the top management team in the international subsidiary: Qualitative evidence on international staffing in U.S. MNCs in the Republic of Ireland

International staffing is a central plank of enquiry in MNC research. In this context, much of the research effort has been dedicated to providing an understanding of expatriation from a headquarter perspective and on unearthing explanatory factors and situational issues associated with the expatriation of parent country nationals. Comparatively less is known about the utilisation of host country nationals (HCNs) and third country nationals (TCNs) in staffing key positions in MNC subsidiary operations. Drawing on the results of a qualitative study in the Irish context, the current paper presents a nuanced perspective on the staffing of MNC subsidiaries from a subsidiary perspective. We find that HCN and TCN employees play a key role in managing the U.S.-owned Irish subsidiaries investigated, most of which display a strong centralised control over their Irish subsidiaries. Our findings also point to a pattern of temporal evolution in the staffing policies pursued within the MNCs. Furthermore, our research lends support to the proposition that the use of HCNs and TCNs to staff senior positions in new expansions within the host country is higher where the expansion follows a wave of earlier investment in that location. We explicate our findings in the context of the enfolding literature and highlight the implications of the research for international staffing theory and practice.     

Factors in the effective transfer of knowledge from multinational enterprises to their foreign subsidiaries: a Mozambican case study

The purpose of this article is to better understand the role of internal stakeholders in subsidiaries of multinational companies (MNCs) in order to offer potential insights into the cross‐border transfer of knowledge from those companies’ headquarters to their subsidiaries. The focus is upon subsidiaries in developing countries, here Mozambique. More specifically, the article is concerned with identifying factors that influence the learning of internal stakeholders and noting practices which seem associated with a high level of absorptive capacity and performance of subsidiaries. The starting point is evidence of ineffective transfer of knowledge by MNCs to their subsidiaries in developing countries, with consequent sub‐standard performance. The research reported involves four case studies of Portuguese companies operating in Mozambique and draws on data from interviews with senior and middle managers in the firms’ Mozambican subsidiaries. The results obtained suggest that successful knowledge transfer to overseas subsidiaries is found under the following conditions. First, the parent company knows the local context and provides a flow of relevant information. Second, application of knowledge locally is done flexibly to suit local circumstances. Next, a participatory approach is used so that local staff can see why the knowledge conveyed is necessary. Fourth, explanation and demonstration are key techniques, with major roles for on‐the‐job training, continuous improvement and training at headquarters. Finally, issues arising from local culture may need to be addressed.     

The influence of market and cultural environmental factors on technology transfer between foreign MNCs and local subsidiaries: A Croatian illustration

Technology transfer from multinational corporations to local subsidiaries is essential for successful local market operations. In this study, the environment-strategy-performance framework is used to investigate the effects of market and cultural environmental factors on international technology transfer, and resultant performance. The relative influence of two factors of the market environment, i.e., competitive intensity and market dynamism, and the relative influence of two factors of the cultural environment, i.e., national cultural distance and organizational cultural distance, are examined. The results of a survey of 131 managers of subsidiaries of foreign multinational corporations indicate the direct effects of market and cultural environmental factors on international technology transfer, with market dynamism found to be a more influential market environmental factor than competitive intensity and organizational cultural distance found to be a more influential cultural environmental factor than national cultural distance. Further, a significant positive relationship between technology transfer and subsidiary performance was found. Theoretical and practitioner implications are discussed.     

Subsidiary autonomy and performance in Japanese multinationals in Europe

Notwithstanding the growing body of research on headquarters–subsidiary relationships, the conditions under which subsidiary autonomy leads to enhanced subsidiary performance is still a subject of debate. This study adopts a contingency approach and investigates the effects of external uncertainties and intra-MNE coordination on the performance benefits of subsidiary autonomy. The empirical analysis is based upon cross-sectional data collected from 88 European subsidiaries of Japanese MNEs. Our findings show that subsidiary autonomy has a greater impact upon performance (a) under conditions of technological uncertainty; and (b) when expatriate involvement is high, as the subsidiary can reap the full benefits of entrepreneurial capabilities and enjoy resource interdependencies through interactions with the parent simultaneously. MNC executives should aim for an appropriate balance between subsidiary autonomy and these internal and external factors so that the subsidiaries achieve superior performance.     

French multinational companies' HRM in China: strategic orientation and integration approaches

The purpose of this qualitative study is to identify strategic orientation and integration approaches of French companies in implementing the headquarters-based human resource management (HRM) practices in their Chinese subsidiaries. Through a study of 16 French multinationals’ HRM, our findings reveal that a majority of sample companies tend to standardize the HRM practices in their Chinese subsidiaries to a great extent. This strategic orientation is supported by a combination of specific integration approaches at the subsidiary level. The results add knowledge to international management theory and allow us to develop implications in managing employees in China.     

A Fuzzy Set Analysis of Foreign-Owned Subsidiary Performance: Insights from East Asia

The purpose of this study is to investigate the multiple conditions that affect performance in foreign-owned subsidiaries. This research is based on a survey of foreign-owned subsidiaries located in the midrange emerging economy of Taiwan. The resulting data set consists of 226 subsidiary managers’ responses. Using configurational theory to guide our argumentations, the author shows that three different paths lead to higher performance, hence, indicating equifinality. Overall, results show that only subsidiary competences are a core condition for high performance. Networks, autonomy, market orientation, industry, and relatedness are only peripheral.     

Investment and marketing strategies of Mexican companies in the United States: Preliminary evidence

Because of its geographic proximity to the United States and its favored position as a member of the North American Free Trade Agreement (NAFTA), Mexico has become an emerging player in the global marketplace, and this new position has motivated several Mexican companies to establish businesses in the United States. Attempts have been made to explain why Mexican firms have become global players, explanations that focus on several national and international factors. However, these factors omit important drivers of the process, including entry and marketing strategies. This study aims to 1) give an account of how and why Mexican companies enter the United States, and 2) identify some tendencies in the way U.S. subsidiaries of Mexican companies develop and use marketing strategies to serve U.S. markets. © 2004 Wiley Periodicals, Inc.     

Foreign subsidiaries' status: Distinctive determinants and implications for subsidiary performance

The purpose of this article is to develop a theoretical framework for understanding what determines foreign subsidiaries' status, and how status affects their performance. The basic argument is that foreign subsidiaries have several unique characteristics that distinguish them from local firms in terms of the factors determining organizational status and the implications status has for subsidiaries' performance. This conceptual article first reviews the three existing determinants of organizational status as theorized by existing status research and makes the case for an extension of the three determinants to account for the special situation of foreign subsidiaries. Having examined the determinants of subsidiary status, this study explores the effect of organizational status on firm performance, and finds that it reduces the liability of foreignness (LoF) that foreign subsidiaries encounter. The study contributes to multiple research streams, including organizational status, LoF, country of origin (CoO), and the international business literature in general. Practically, this study highlights the importance of obtaining high organizational status and provides valuable suggestions for multinational managers in general and subsidiary managers in particular.     

The influence of management and auditors on consolidation decisions

Historically, the decision over whether or not to consolidate was guided by bright-line rules, which outlined the minimum percentage of ownership required in a subsidiary for it to be considered controlled by a reporting entity and thus included in the consolidated financial statements (CFSs). Today, U.S. GAAP and IFRS use a principles-based approach, which is guided by the concept of control to determine whether a subsidiary is to be consolidated in the CFSs. In this context, a debate exists between managers and auditors about which subsidiaries should be consolidated. To deepen our understanding of how managers and auditors grapple with consolidation decisions, we interviewed several CFOs and audit partners to determine if they are anchored to legalistic mechanisms or if, instead, they are strategically developing ways to support the consolidation decision. Based on our interviews, we find that opportunistic transactions—criticized at the time of the rules-based approach—still exist due to the search for legalistic mechanisms that protect underlying choices influenced by economic incentives. Such results are crucial for analysts and investors to properly interpret consolidated financial performance.     

Expatriate management: Comparison of MNCs across four parent countries

This article reports the results of a study of expatriate management and headquarters‐subsidiary relations in 29 American, British, German, and Japanese multinationals and a sample of 46 of their foreign subsidiaries based on face‐to‐face and telephone interviews with key international HR, subsidiary HR, and subsidiary managing directors. We found that earlier studies, heavily weighted with U.S. multinationals, cannot necessarily be applied to expatriate management experiences of other national industrial countries. Also, expatriate management is more similar for American and British MNCs, while both German and Japanese multinationals in our sample had fairly distinct systems of using expatriates in their foreign subsidiaries. Thus, we can discuss at least three fairly distinct models of expatriate management and corporate‐foreign‐subsidiary control. © 2000 John Wiley & Sons, Inc.     

Parent company benefits from reverse knowledge transfer: The role of the liability of newness in MNEs

Research on reverse knowledge transfer (RKT) has relegated subsidiary age to a control variable. However, to the extent that subsidiary age captures experience with host countries and internal networks, it reflects accumulated knowledge stocks and capabilities. We draw on organizational ecology theory to theorize that subsidiary age is an important determinant of parent company benefits from RKT and that RKT from older subsidiaries is viewed as more beneficial to the parent company than RKT from younger subsidiaries. This relationship is negatively moderated by the use of acquisitions and majority-owned joint ventures, and positively moderated by the use of socialization mechanisms.     

The performance effects of vertical and horizontal subsidiary knowledge outflows in multinational corporations

Horizontal and vertical subsidiary knowledge outflows in multinational corporations (MNCs) are argued to be central to effective MNC performance. Building on the knowledge-based view of the firm, we develop a conceptual model to investigate the performance consequences, determinants and interaction effects due to coordination and control mechanisms, of horizontal and vertical MNC subsidiary knowledge outflows. The hypotheses are empirically tested with a dataset comprised of survey and archival data from over 200 MNC subsidiaries. Results indicate that explicitness and communication positively influence vertical and horizontal subsidiary knowledge outflows and that national cultural distance, centralization, formalization, and specialized resources moderate these influences. We also find that knowledge outflows to headquarters and to peer subsidiaries enhance an MNC's financial performance (i.e., return on assets). The results provide substantive evidence as to how vertical and horizontal knowledge operate within MNCs.     

Subsidiary strategy of emerging market multinationals: A home country institutional perspective

We examine the effects of home country institutional factors, namely, home country government support, domestic institutional weaknesses, and state ownership on the subsidiary-level strategy of global integration (I) and local responsiveness (R) of emerging market multinational enterprises (EMNEs). We draw upon the home country institution-based view and the I/R framework to develop our theoretical model. We empirically test our hypotheses using an original new survey data collected from Chinese multinational subsidiary managers supplemented with parent-level and country-level data. We find that home country government support and domestic institutional weaknesses have significant and negative effects on global integration strategy of Chinese multinational subsidiaries. On the other hand, domestic institutional weaknesses push foreign subsidiaries to pursue local responsiveness strategy. Nevertheless, those with greater degree of state ownership in their parent firms are neither willing to disintegrate from their parent firms nor motivated to pursue local responsiveness strategy in order to deal with home country institutional deficiencies and develop new sources of competitiveness in foreign markets. Our findings have advanced the literature on subsidiary strategy in the context of EMNEs, and provide important implications for subsidiary managers and policy makers.