Subsidiary staffing,cultural friction,and subsidiary performance: Evidence from Korean subsidiaries in 63 countries

Drawing from the notion of cultural friction and based on the agency theory rationalization of multinational enterprise (MNE) headquarter–subsidiary relationship, we examine the impact of cultural friction in foreign subsidiaries on subsidiary performance. We argue that cultural friction, arising due to a high presence of parent country nationals (PCNs) in culturally distant locations, has a detrimental effect on subsidiary performance. This effect is the strongest when the cultural friction is at the top management team (TMT) level and the weakest when friction is at the regular employee level. However, this relationship is contingent on factors that work as drags or lubricants for cultural friction between PCNs and host country nationals (HCNs). We identify governance mode and language differences between home and host countries as drag parameters and host country experience and subsidiary interdependence as lubricants that condition the effect of cultural friction on subsidiary performance. Empirical findings based on a longitudinal sample of 7,495 foreign subsidiary observations of 467 Korean MNEs in 63 countries during 1990–2014 provide robust support for our theoretical predictions.     

Estimation in a generalization of bivariate probit models with dummy endogenous regressors

The purpose of this paper is to provide guidelines for empirical researchers who use a class of bivariate threshold crossing models with dummy endogenous variables. A common practice employed by the researchers is the specification of the joint distribution of unobservables as a bivariate normal distribution, which results in a bivariate probit model. To address the problem of misspecification in this practice, we propose an easy‐to‐implement semiparametric estimation framework with parametric copula and nonparametric marginal distributions. We establish asymptotic theory, including root‐n normality, for the sieve maximum likelihood estimators that can be used to conduct inference on the individual structural parameters and the average treatment effect (ATE). In order to show the practical relevance of the proposed framework, we conduct a sensitivity analysis via extensive Monte Carlo simulation exercises. The results suggest that estimates of the parameters, especially the ATE, are sensitive to parametric specification, while semiparametric estimation exhibits robustness to underlying data‐generating processes. We then provide an empirical illustration where we estimate the effect of health insurance on doctor visits. In this paper, we also show that the absence of excluded instruments may result in identification failure, in contrast to what some practitioners believe.     

An Empirical Investigation on the Transfer of Expatriates Within MNCs from a Knowledge Perspective

We study the use of expatriates in transferring knowledge within a multinational corporation (MNC). We argue that MNCs use expatriates to allocate knowledge between headquarters and its foreign affiliates. With data from MNCs headquartered in South Korea, we trace unobservable knowledge using observable labour mobility. Our empirical analysis shows that the use of expatriates increases as communication between South Korea and the host country becomes more costly. However, the extent to which the use of expatriates relates with communication costs decreases in the sectoral complexity.     

The prospect of decent work,decent industrial relations and decent social relations in China: towards a multi-level and multi-disciplinary approach

Abstract

Decent Work is a key initiative launched by the International Labour Organization in 1999. The initiative is to promote decent and productive employment with decent conditions of freedom, equality, security and human dignity. In reviewing academic literature on decent work, existing studies have been conducted primarily from a legal and political economic perspective. It is also largely situated outside any national industrial relations framework, both theoretically and practically. Decent work is an advocacy initiative of ILO, but the promotion of universal values embodied in the notion (e.g. equality, fairness, justice and dignity) needs to be tailored to specific societal contexts. Drawing on existing academic literature, this review article examines ideological, institutional and cultural distances between decent work and the reality of employment in China. It argues that achieving decent work requires an ideological transition of ‘traditional’ Chinese work ethics and a cultural transition from collectivism and altruism towards individualism and an emphasis on individual rights. This study also examines and highlights regulatory enforcement deficits and the inadequate role of the trade union in facilitating the advancement of decent work at various levels. Finally, the article argues that the study of decent work should be mainstreamed as an integral part of decent industrial relations and ultimately, decent social relations. It calls for a multi-level and multi-disciplinary approach to examining the historical, political, economic, ideological and cultural context of specific countries in fulfilling the ‘Decent Work’ agenda.     

Retaining the visitor,enhancing the experience: identifying attributes of choice in repeat museum visitation

• How people make choices in relation to cultural and leisure consumption has been explored from the viewpoint of motivation, lifestyle segmentation, and lifecycle. Little is known about the specific characteristics associated with choices to visit, re‐visit, or not to visit a museum. Understanding characteristics of choice, developing incentives, bundled packages, and levels of pricing is an essential element in marketing strategies for museums operating in a competitive leisure marketplace. However, determining what really matters to cultural consumers is complex and methodologies to assist in unraveling such complexities are not easily identified. This study aimed to address ways in which people respond to specific incentives as influences in choosing museum visitation. The study was conducted in two major museums in Australia to determine how useful choice modeling is in identifying features that matter to cultural consumers. The results suggest that choice modeling has much to offer in relation to understanding the benefits people are seeking from a museum experience as well as offering strategic insight into potential collaborative ventures and re‐combinations of existing museum products and services.

Copyright © 2008 John Wiley & Sons, Ltd.     

Dynamic and non-neutral productivity effects of foreign ownership: A nonparametric approach

This paper studies two novel productivity characteristics of foreign acquisition on high-tech manufacturing firms: the dynamic and the non-Hicks-neutral effects. A dynamic productivity effect of foreign ownership arises when adoption of foreign technology and management practices takes time to fully realize. Furthermore, these dynamic adjustments may be capital or labor augmenting as adoption of advanced production technologies tends to have non-neutral productivity implications in developed countries. We propose and implement an econometric framework to estimate both effects using firm-level data from China's manufacturing sector. Our framework extends a nonparametric productivity framework, in which identification is achieved using a firm's first-order conditions and timing assumptions. We find strong evidence of dynamic and non-neutral effects from foreign ownership, with significant differences across investment sources. Investment from OECD sources is found to provide a long-term productivity boost for all but the largest recipients, while that from Hong Kong, Macau, and Taiwan does not raise performance. These findings have implications for China's declining labor share and for the rising domestic value-added content of its high-tech exports.     

Bias Reduction in Dynamic Panel Data Models by Common Recursive Mean Adjustment*

The within‐group estimator (same as the least squares dummy variable estimator) of the dominant root in dynamic panel regression is known to be biased downwards. This article studies recursive mean adjustment (RMA) as a strategy to reduce this bias for AR(p) processes that may exhibit cross‐sectional dependence. Asymptotic properties for N,T→∞ jointly are developed. When ( log ²T)(N/T)→ζ, where ζ is a non‐zero constant, the estimator exhibits nearly negligible inconsistency. Simulation experiments demonstrate that the RMA estimator performs well in terms of reducing bias, variance and mean square error both when error terms are cross‐sectionally independent and when they are not. RMA dominates comparable estimators when T is small and/or when the underlying process is persistent.     

Avoiding arbitrary exclusion restrictions using ratios of reduced-form estimates

We show how to obtain coherent structural-form (SF) exclusion restrictions using the reduced-form (RF) parameter ratios. It will be shown that an over-identified SF corresponds to a group of regressors sharing the same RF ratio value; those regressors should be excluded jointly from the SF. If there is no group structure, then the SF is just-identified; in this case, however, it is no longer clear which regressor should be excluded. Hence, just-identified SF’s are more arbitrary than over-identified SF’s in terms of exclusion restrictions. This is in stark contrast to the notion that the former is less arbitrary than the latter, because the former excludes fewer regressors. We formalize these points, and then suggest to find the number of modes in the estimated RF ratios as a way to find groups in the ratios. For this purpose, an informal graphical method using a kernel nonparametric method and a formal modality test are employed. An empirical example with selling price in a residential real estate market and duration on the market as two endogenous variables is provided. The authors are grateful to the editor and two anonymous referees for their comments