Intra- and inter-regional diversification,subsidiary value chain activities and expatriate utilization

Although it is well established in the current staffing literature that why and how multinational enterprises (MNEs) allocate more or fewer expatriates in some subsidiaries than others, little is known about why and how some MNEs utilize more or fewer expatriates than other MNEs. This paper builds on regionalization theory to argue that intra- and inter-regional diversification has to do with the overall use of expatriates in MNEs. An empirical investigation of Korean MNEs demonstrates that the degree of intra- and inter-regional diversification has significant impacts on the level of expatriate utilization by MNEs. The results also reveal an interesting moderating influence of subsidiary value chain activities. MNEs tend to vigorously adjust their use of expatriates in downstream subsidiaries depending on the degree of intra- and inter-regional diversification. However, they do not adjust their use of expatriates in manufacturing subsidiaries upon the degree of international diversification. Overall, this study extends our understanding of how MNEs manage a geographically dispersed organization in a semi-globalized world.     

Cross-cultural training and its impact on expatriate performance in Australian MNEs

This study examines cross-cultural training (CCT) policies and practices in terms of provision, mode of delivery and level of rigor, and the relative effects of different CCT programmes on expatriates in Australian multinational enterprises (MNEs). The empirical evidence suggests that the case study Australian MNEs tended to provide highly rigorous CCT, mainly in the form of short-term international assignments, which, however, are yet to be perceived as CCT in the CCT literature. Short-term assignments had a stronger impact on expatriates in terms of cross-cultural adjustment and reducing expatriate failure rate than did in-country CCT. The findings of this study contribute to the debate whether MNEs normally provide expatriates with adequate CCT, and have significant implications for practitioners and further research.     

International adjustment of Brazilian expatriates in the United States of America

The adjustment of expatriates to host countries has been identified as a determinant of their success in international assignments. The literature on expatriates is largely based on cases of expatriates from developed economies; however, given the current global market scenario, companies from developing countries are also assigning expatriates to international assignments. The purpose of this study was to understand the international adjustment of Brazilian expatriates working for Brazilian multinational subsidiaries in the United States of America (USA). The study used an exploratory approach of in-depth interviews with open-ended questions conducted with 11 Brazilian expatriates working for 11 different Brazilian multinationals in the USA. The contributions of this study are twofold: (1) exploration of the adjustment perspectives of expatriates of Brazilian multinational companies, and (2) exploration of the effects of variables from the USA context, as host country, on the international adjustment of expatriates. Findings show that Brazilian expatriates perceived that rules and laws of the USA had a great effect on their international adjustment, while cross-cultural differences influenced leadership styles and interpersonal relationship.     

How MNE subsidiaries transfer HRM practices in distant environments: A tale of two IKEA subsidiaries

While most research in the international business field focuses on the impact of the national institutional environment on multinational enterprises (MNEs), this paper explores the opposite relationship—the role and impact of MNE subsidiaries on the host country institutional environment. I analyze the subsidiaries' agency in the transfer activities of human resource management (HRM) practices by bringing the case of IKEA subsidiaries in Korea and Japan and find that these subsidiaries not only adapted to pressures arising from an institutional distance but also played an important role in influencing the institutional arrangement for employment system of their host countries. With a contextualized agency model, this study finds that institutional and organizational contexts that these subsidiaries are embedded in shaped their agencies and strategic responses and co-evolved with their host institutional environments while transferring HRM practices. These findings have implications for the IB and IHRM field, as they highlight the potential of MNE subsidiaries as agents.     

Headquarter Services in the Global Integration of Production

This study examines knowledge management within multinational enterprises (MNEs) by analyzing whether greater interdependence of production between U.S. parent firms and their foreign subsidiaries increases the provision of headquarter (HQ) services from the home country. The findings suggest that U.S. parents provide more assistance to their foreign subsidiaries that are linked in a global value chain than to those that are not involved in production sharing. This study builds on the earlier studies of the relationship between intra-MNE product flows and knowledge flows in multiple ways. First, it separately examines the relationship for high-tech and low-tech manufacturing industries, and finds that knowledge services from HQ that could be combined with knowledge of the subsidiary, such as R&D services, are primarily associated with production sharing with subsidiaries in high-tech manufacturing industries, which are assumed to be more technologically capable. Likewise, it finds that knowledge services from HQ that might be considered to be more passively received from the parent, such as industrial-type maintenance and design, are primarily associated with subsidiaries in low-tech manufacturing industries, which are assumed to be less technologically capable. Second, this study is the first one, to our knowledge, that gauges intra-firm knowledge flows using dollar-denominated measures of HQ services provided by parents to their subsidiaries.     

The role of R&D resource commitment in accessing co-location advantages

In a globalized economy, multinational enterprises (MNEs) pursue competitiveness through cross-border knowledge exploitation and exploration in international R&D. It is conventionally assumed that for subsidiaries to effectively access co-location advantages in knowledge milieus abroad, high levels of resource commitment are required. This paper analyses the relationship between resource commitment and access to co-location advantages, first theoretically and then through a case study of two MNEs in high-tech industries. We disaggregate the composite concept of resource commitment and demonstrate the dimensions accentuated, respectively, by the resource-based view, transaction cost economics and institutional theory. Next, we analyse the relationship between resource commitment and co-location advantages for 11 R&D subsidiaries of the two MNEs. Based on this analysis, we discuss the relationships between the empirical findings and the theoretically differentiated resource commitment dimensions. The study finds that high resource levels are less important for access to co-location advantages than conventionally assumed, while the level of commitment associated with allocated resources appears consistently to be important, lending more support for the relevance of institutional theory-related dimensions of resource commitment than the resource-based view-related ones. We also find support for the claim that more flexible governance arrangements promote access to co-location advantages in asset exploration.     

Where Do We Go from Here?: Globalizing Subsidiaries Moving Up the Value Chain

This paper studies the international expansion of local subsidiaries of multinational enterprises (MNEs). The main questions asked are why and how MNEs' local subsidiaries in developing economies undertake international expansion. Drawing from the global value chain (GVC) perspective, I argue that local subsidiaries that were initially established to undertake production activities for export-oriented industries do not want to remain at the lowest-value-added position forever. They therefore undertake initiatives to get out of that position. The literature on initiative-taking subsidiary has predominantly focused on them becoming centers of excellence via R&D and innovation in the host country. I propose a different route of local subsidiary upgrading via foreign direct investment in more advanced countries. This strategy helps not only to gain internal prominence within the MNE network, but also to improve its external position within the GVC vis-à-vis the lead firms. The paper uses an in-depth case study of a Thai subsidiary of a Taiwanese electronic MNE to explore the transformation of the subsidiary from simply manufacturing for exports to becoming a strategic international expansion arm for the parent MNE.     

Temporal and Spatial Constructs in Service Firms' Internationalization Patterns: The Determinants of the Accelerated Growth of Emerging MNEs

The recent years have witnessed an unprecedented surge of Emerging Multinational Enterprises (EMNEs), i.e. firms from the emerging economies that have started internationalization very late and have expanded abroad in a rather accelerated fashion.In particular, pace and international diversification emerge as distinctive features of service EMNEs' successful internationalization patterns, inducing scholars to question the applicability of traditional internationalization theories to EMNEs. The Linkage–Leverage–Learning (LLL) Model and the springboard perspective identified some of the critical EMNEs uniqueness and investigated potential antecedents of their abnormal patterns. Nevertheless, previous contributions neglected to provide a solid empirical base for measuring spatio-temporal dimensions of EMNEs' internationalization.This paper aims to empirically investigate the dimensions affecting the pace at which EMNEs enlarge their geographic scope, by performing OLS regression analysis.The main outcomes demonstrate the crucial role of cumulative benefits from inward internationalization and inter-regional diversification strategies in boosting EMNEs' overseas expansion, in opposition to traditional MNEs (TMNEs). The results corroborate some assumptions of emerging theories on EMNEs, and provide insight for extending traditional MNEs theories by rethinking concepts, relations and causalities.     

Genetic distance,international experience and the performance of cross-border R&D for EMNEs

Cross-border R&D can contribute to the enhancement of independent innovation capabilities of emerging markets multinational enterprises (EMNEs) by benefiting from knowledge management. However, scant research exists examining the location impact of cross-border R&D for EMNEs on performance implications. This paper fills this important theoretical gap by building upon the literature of genetic distance in connection with knowledge management. We use a panel data of Chinese high-tech listed companies to empirically examine the impact of genetic distance on the performance of cross-border R&D and the role played by international experience. Our results reveal a positive relationship between genetic distance and the performance of cross-border R&D. Importantly, we highlight the motivation for cross-border R&D of EMNEs to acquire technical knowledge magnifies the positive effects of genetic distance and performance. Furthermore, our analysis indicates that international experience significantly enhanced the positive effect of genetic distance on cross-border R&D performance. We conclude this paper by discussing theoretical contributions to genetic distance, international management and knowledge management, as well as practical implications for cross-border R&D of EMNEs.     

International Diversity Management: Global Ideals and Local Responses

While the concern with demographic diversity in organizations has increased during recent years, international diversity management still remains an understudied area. This is unfortunate since the transfer of diversity management practices within multinational corporations faces particular challenges in balancing between global integration and local responsiveness. The aim of this paper is to illustrate some of the central problems that multinational corporations need to deal with when transferring diversity management practices from headquarters to local subsidiaries. This is illustrated by the results of an ethnographic field study on Danish expatriates in a Saudi subsidiary. Implications of the findings are discussed in detail.     

Between a rock and a hard place: Internal- and external institutional fit of MNE subsidiary political strategy in contexts of institutional upheaval

We investigate how subsidiaries' political capabilities in emerging markets are not just shaped by their home- or host country institutions, but by both simultaneously - presenting a dilemma for subsidiaries of multinational enterprises (MNEs) in host countries. Subsidiaries need to develop CPA that simultaneously “fit” parent company requirements and “external fit” requirements in relation to the host environment. Achieving this dual fit is particularly difficult in volatile host contexts, where the value of political capabilities changes rapidly. Subsidiaries face a dilemma because the easily transferable capabilities – that draw on parent resources – lose value due to their decreasing “external fit” with the host country's volatile institutional environment. Conversely, the most valuable relational political capabilities lack “internal fit,” as they may not be legitimate in the home environment. To understand how firms deal with this dilemma, we develop a typology of political capabilities that takes into account their transferability/stickiness and their dynamic institutional contingency in the host country. Our study shows that MNEs - even from institutionally very different economies - can successfully transfer political capabilities to develop effective CPA in a volatile political environment. Yet, as political risk becomes discontinuous, this strategy may reach its limits.     

Effect of outgroup social categorization by host-country nationals on expatriate premature return intention and buffering effect of mentoring

Outgroup social categorization by host-country nationals (HCNs) is a common challenge for expatriates and it has received inadequate scholarly attention in expatriate research. This study explores how outgroup social categorization affects expatriate intention to terminate international assignments prematurely and how this adversity can be lessened through organizational mentoring interventions. We theorize that outgroup social categorization by HCNs results in social isolation for expatriates, which triggers expatriates' early return intentions, and mentoring mitigates this indirect effect. The hypotheses were supported by the analyses of multisource data collected from expatriates and their local co-workers in multinational enterprises operating in China. Theoretical and practical implications of the research findings are discussed.     

The Role of Local Context in the Cross‐border Acquisitions by Emerging Economy Multinational Enterprises

This paper explores the role of local context in cross‐border acquisitions by emerging economy multinational enterprises (EMNEs). It argues that the importance of local context has remained despite the increased global integration of the world economy. Hypotheses are tested using data on Indian acquisitions hosted in 70 countries over an eight‐year period. Results, which are consistent across number and value of cross‐border acquisitions, show that the local context in host countries offers contrasting benefits. Emerging economy multinational enterprises exploited these benefits by embedding in host countries through acquisitions. The acquisition strategy is conventional in the motives underpinning internationalization, but novel in its geographical clustering of host countries, and idiosyncratic owing to the EMNE's ability to draw on home country embeddedness. The paper develops theoretical implications and extends the concept of embeddedness, treating it as a series of internalization or quasi‐internalization decisions across a variety of local contexts by multinationals.     

Towards a re-conceptualization of firm internationalization: Heterogeneous process,subsidiary roles and knowledge flow

This paper proposes a re-conceptualization of firm internationalization to understand and predict the rapid global expansion of firms since the 1990s, especially those from emerging markets. First, based on a review of existing literature, we re-conceptualize firm internationalization as a heterogeneous process of strategic development of subsidiaries in overseas countries or regions. This re-conceptualization captures the pluralistic character of the process of firm internationalization.Second, we delineate peculiar roles played by subsidiaries in pursuit of multinational enterprise (MNE) headquarters' internationalization strategies. We argue that the HQ's heterogeneous strategies toward overseas subsidiary development define the corresponding roles of subsidiaries, which in turn shape the knowledge-flow patterns within the MNEs. Finally, we link firms' internationalization strategies with different subsidiary roles to generate hypotheses concerning the effect of such links on subsidiary performance. We argue that the proper alignment of HQ's internationalization strategies with subsidiary roles will lead to success of the overseas subsidiaries; by contrast, a mismatch will lead to subsidiary failure. The paper thus contributes to the field of firm internationalization by linking its new conceptualization with the literature on subsidiary roles and knowledge flows in MNEs.     

Managing expatriates to achieve mutual benefits: An integrative model and analysis

Embracing a mutual-benefit perspective of expatriation management, this study argues that multinational enterprises (MNEs) seeking to build a sustainable expatriation management system should address the goals of both expatriates and organisations simultaneously. To realize such a system, we propose ability-, motivation- and opportunity-attributes as a tripod of expatriate competence-enhancing practices (EC-Ps). Via a matched survey dataset from 150 expatriates and their headquarters (HQs) managers, this study (1) investigates the effects of implementing EC-Ps on both subsidiary and employee outcomes, and (2) explores a sequential mediation mechanism of cross-cultural competence and subsidiary autonomy between the relationships. The implications of the findings for theory and practice are discussed.     

Multinational Enterprises: Leveraging a Corporate International Entrepreneurship Lens for New Insights Into Subsidiary Initiatives

Corporate entrepreneurship has long been acknowledged as critical to multinational enterprises (MNEs), with dispersed entrepreneurial efforts involving subsidiary initiatives becoming increasingly relied upon. Yet despite the global context in which MNEs operate, the conversation has not fully embraced the extent to which many of its entrepreneurial activities overlap with internationalization. In this paper, we identify a set of opportunity phenotypes for subsidiary initiatives based on their market focus as well as the knowledge and capabilities leveraged to identify and exploit the opportunity. The recursive relationship between opportunities and dynamic capabilities is then discussed, with an emphasis on building a research agenda for corporate international entrepreneurship.     

Why Are Some Subsidiaries of Multinationals the Source of Novel Practices while Others Are Not? National,Corporate and Functional Influences

It has frequently been argued that multinational companies are moving towards network forms whereby subsidiaries share different practices with the rest of the company. This paper presents large‐scale empirical evidence concerning the extent to which subsidiaries input novel practices into the rest of the multinational. We investigate this in the field of human resources through analysis of a unique international data set in four host countries – Canada, Ireland, Spain and the UK – and address the question of how we can explain variation between subsidiaries in terms of whether they initiate the diffusion of practices to other subsidiaries. The data support the argument that multiple, rather than single, factor explanations are required to more effectively understand the factors promoting or retarding the diffusion of human resource practices within multinational companies. It emerges that national, corporate and functional contexts all matter. More specifically, actors at subsidiary level who seek to initiate diffusion appear to be differentially placed according to their national context, their place within corporate structures and the extent to which the human resource function is internationally networked.     

Introducing the expatriate ‘Entry-Mode’: an exploratory qualitative study of a missing link in global mobility and expatriate management research

ABSTRACT

This article introduces the novel concepts of expatriate ‘entry-modes’, ‘comb-patriates’, and ‘Fourth-Country Nationals’ (FCNs), emerging from an exploratory qualitative investigation of 51 Scandinavian expatriates in Hong Kong. Global mobility research has traditionally been overly focused on the characteristics and background variables of expatriates or accumulated experiences after arrival, and has neglected the phase and mode of entering the new host country. Unveiling new global mobility patterns is significant for multinational enterprises’ (MNE) global talent recruitment, and has implications for training and development. This is due to directing the focus towards the increasing numbers of those individuals who are not expatriating in the conventional linear fashion, such as between an MNE’s headquarter (HQ) and its subsidiaries overseas. The critical stance taken in this article is articulated through a theoretical lens comprising a social constructionist epistemology. Theoretical contributions, future research avenues, as well as managerial relevance and policy implications are also discussed.     

Subsidiary power,cultural intelligence and interpersonal knowledge transfer between subsidiaries within the multinational enterprise

We propose that individual-level knowledge transfer between subsidiaries within a multinational enterprise depends on the perceived relative power of the subsidiary and the cultural intelligence of individuals. Using a sample of 333 research and development (R&D) subsidiary employees of foreign Multinational Enterprises (MNEs) in India, we find that the perceived subsidiary power has a direct positive significant effect on knowledge sharing, and an indirect significant effect, through organizational identification, on knowledge seeking. Further, cultural intelligence moderates the effect of organizational identification on knowledge seeking, and the indirect effect of the perceived subsidiary power on it. The findings highlight the role of organizational identification and cultural intelligence in explaining the impact of the perceived subsidiary power on interpersonal knowledge transfer within the MNE.     

A Note on Return on Foreign Assets and Foreign Presence for UK Multinationals*

Within the context of the international business literature on multinationality and performance we develop new data on the foreign presence and performance of large UK multinational enterprises (MNEs). There are 32 UK MNEs for which we can obtain data on both their degree of multinationality (measured by the ratio of foreign to total (F/T) sales) and their performance. Here, in addition to the traditional overall performance of the firm, shown as return on total assets, we use new data on the return on foreign assets (ROFA). We conduct analytical work to show the positioning of the UK MNEs in the ROFA and F/T sales space and provide regression results showing a linear relationship between multinationality and performance, using the new ROFA metric.