Consequences of expatriate top manager replacement on foreign subsidiary performance

Integrating expatriate staffing and leadership succession literature, this study investigates the influence of expatriate top manager replacement on foreign subsidiary performance and the moderating effects of subsidiary context. Building on a refined understanding of agency theory and evidence from 2113 firm-year observations, including 260 expatriate successions, this study shows that when expatriates are replaced, regardless by whom (either host-country national or expatriate manager), the performance of the subsidiaries declines, suggesting that the departure of expatriate top managers often see subsidiaries being left in a less than favorable condition. If the subsidiary's prior performance has been unsatisfactory, the newly appointed expatriate might not be able to prevent further deterioration of its performance. Replacing expatriates with host-country national managers can help improve subsidiary performance, but this usually happens in older, more established subsidiaries. These findings framed in a refined agency theory provide us a more in-depth understanding of expatriate staffing failure.     

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.     

Configuring knowledge connectivity and strategy conditions for foreign subsidiary innovation

We argue that product innovation by foreign subsidiaries of multinational corporations is a complex undertaking requiring a theoretical understanding of how managers combine subsidiary structural arrangements, knowledge connectivity, and contextual conditions into configurations that yield innovative products. Accordingly, we integrate relevant conditions from interrelated literature streams and explore their complementarities and substitutions in relation to subsidiary product innovation. Using a neo-configurational approach and data on 183 foreign subsidiaries operating in Europe, we identify six equifinal configurations associated with subsidiary product innovation. We leverage the configurational patterns to elaborate theory of how subsidiary product innovation is primarily driven by the interrelations among the relevant conditions, thus contributing novel insights to research on subsidiary management and global innovation.     

Improving Expatriation Success: The Roles of Regulatory Focus and Burnout

The study empirically and theoretically contributes to the human resource management discipline by developing and testing a cohesive model drawing on the pertinent literature from expatriate management, burnout and regulatory focus theory. Drawing on data from 233 expatriate managers, the study aims to examine the relationships between expatriate adjustment and the outcomes of job satisfaction and withdrawal cognitions via expatriate burnout. Specifically, the findings reveal that (a) higher levels of both work adjustment and interaction adjustment lead to reduced expatriate burnout, with the former having a greater effect on burnout than the latter; (b) burnout serves as a full mediator between work adjustment and withdrawal cognitions, and a partial mediator between work adjustment and job satisfaction; and (c) regulatory focus serves to moderate expatriate adjustment–outcome consequences, i.e. promotion‐focused (as opposed to prevention‐focused) expatriates demonstrate a stronger burnout–job satisfaction relationship. Several implications are extracted from the study for regulatory theory, burnout and expatriation management practices as well as suggested avenues for future research.     

The diminishing effect of cultural distance on subsidiary control

This paper explores the diminishing influence of national cultural distance on two subsidiary control issues, expatriate staffing and parent company ownership level of the foreign subsidiary. Previous studies have produced conflicting findings: one stream of research argues that when cultural distance is greater firms increase their level of control; while the other stream suggests that greater cultural distance is associated with a loosening of control. To reconcile these discrepant outcomes we hypothesize and find that subsidiary age moderates the effect of cultural distance on expatriate staffing and ownership. Cultural distance has a significantly greater impact on subsidiary control mechanisms for newer subsidiaries than for older subsidiaries. Implications for future research are discussed.     

Micropolitical Dynamics of Interlingual Translation Processes in an MNC Subsidiary

Drawing on a deep single case study of a Polish subsidiary of a US‐headquartered pharmaceutical multinational company (MNC), the paper contributes to the study of power and politics in international business (IB) by advancing understanding of the interactional and processual dynamics of micropolitics in MNCs, which supplements the current dominant actor‐centred approach. The paper advances understanding of translation in IB by demonstrating how interlingual translation can be deliberately used as a management tool to pre‐empt resistance and promote managerially desired attitudes and behaviours at the subsidiary level. It highlights how hitherto largely ignored processes of interlingual translation provide an important internal forum for the exercise of power and micropolitics. The paper puts forward an emergent model of the micropolitical dynamics of interlingual translation and demonstrates how subsidiary managers can use interlingual translation to support and oppose the views of both corporate and local managerial colleagues, and thereby influence how HQ‐level decisions will be received by subsidiary‐level employees.     

Expatriate mangers: A historical review

As expatriate managers continue to be a viable means for exercising control over foreign operations, they can have a direct impact on organizational performance, and therefore a delineation of the history of these key leaders in order to enhance our understanding of their continued significant impact is a laudable goal. The paper discusses each stage of the human resource management process, beginning with the identification and concluding with the repatriation stage of expatriate managers. Each stage is discussed in terms of the successes as well as problems/failures associated with the individual, organizational, environmental and systemic unit in mind. The paper concludes with future implications emphasizing the necessity to create new and/or enhance current practices relating to the development of expatriate managers' maximum global impact depending on the evolving nature of the globalization of business.     

Key Issues in the Senior Female International Career Move: A Qualitative Study in a European Context

Research investigating the position of women in management has, largely, been confined within national boundaries. Over the last 15 years, empirical studies of women in international management have been undertaken, predominantly in North America. Overall, however, in this research field, many questions remain unanswered or have been only partially addressed. The particular focus of this study is on the senior female international managerial career move in Europe – a relatively unexplored area. Fifty senior female expatriate managers were interviewed, representing a wide range of industry and service sectors. The aims of the study were to develop an understanding of the senior female international career move in a European context in order to more fully understand both the covert and overt barriers that may limit women's international career opportunities. The results of the study show that the senior international career move has largely been developed along a linear male model of career progression, a development which, taken together with gender disparity both in organizations and family responsibilities, frequently prevents women employees from reaching senior managerial positions. The findings suggest that organizations which adopt a proactive approach to female expatriate managers should have a competitive advantage in the international environment.     

Corporate expatriate career development

Western business expatriates assigned to Hong Kong responded to a mail survey regarding availability and usage of corporate career development activities. Despite the strategic need for expatriation, it was found that corporate development activities had a low availability indicating little interest on the part of parent organizations to assist in the development of expatriate careers. Large-size parent organizations, with substantial interests in international business operations, generally provide more expatriate career development assistance as opposed to small and medium-sized enterprises with fewer resources and little experience to cater to such needs. Experienced expatriate managers generally use more career development activities than less experienced managers, which could pose a problem for the procurement and advancement of new generations of expatriate managers. Implications of these findings for managers and their employers are discussed in detail.     

Antecedents and Outcomes of Political Tie Intensity: Institutional and Strategic Fit Perspectives

Although international nonmarket strategy research has highlighted the importance of political ties, it is still unclear why some foreign subsidiaries are more politically active than others and what conditions may render political practices beneficial in a host country. We argue that foreign subsidiary political tie intensity—the extent to which senior managers provide time and resources in informally dealing with government officials for nonmarket purposes—will be influenced by political institutions in their parent's home country, especially when the MNE parent attempts to protect foreign subsidiary resources. Additionally, we assert that fit between a parent's home country political institutions and foreign subsidiary political tie intensity will positively affect subsidiary performance. We employ primary data collected from 181 foreign subsidiaries in the Philippines and find support for our hypotheses. This study advances international nonmarket strategy research by highlighting how an MNE's home country political institutions shape subsidiary political networking and strategic performance outcomes in host country environments.     

The impact of emerging markets on staffing the global organization:: A knowledge-based view

As organizations become more global in their strategic orientation, the need for developing global managers becomes imperative. One of the distinguishing features of global organizations is to effectively manage global operations in a consistent manner but at the same time allow flexibility at the country level to effectively compete. Acquisition and sharing of tacit social knowledge necessary to work globally but with a contextual understanding of local markets require a unique set of management skills. The process of inpatriating host and third country nationals into the home country organization appears to hold significant potential in developing a pool of future global managers. This article presents a theoretical perspective to analyze the contextual factors influencing the staffing choice when to utilize expatriate and inpatriate managers in global organizations.     

Psychophysiological reactions during the first year of a foreign assignment: Results of a controlled longitudinal study

Previous studies reveal that employees are exposed to several potential stressors during foreign assignments. This prospective multidisciplinary study followed managers (expatriate group) before and during their first year of an international work assignment. Concurrently, a matched reference group that did not relocate was observed. The secretion of the stress-sensitive hormone prolactin increased in the expatriate group during the first year abroad, compared to the reference group. Selfesteem, family relations, language skills, decreased internal locus of control and job promotion explained 32% of the variance in serum prolactin levels. Lower self-esteem and sense of coherence was related to increased serum prolactin. Increased working hours were associated with decreased work satisfaction. Job promotion was not related to work satisfaction. Mental well-being decreased in the expatriate group, compared to the reference group. Individual factors such as a strong sense of coherence and social provision attenuated decreases in mental well-being. A significant increase in cigarette and alcohol consumption was found in the expatriate group during the first year abroad. This study indicates that there are important psychosocial determinants influencing psychophysiological response patterns in expatriates. The present results put into question the generalizability of the 'culture shock' syndrome. The results have practical implications for guiding expatriates on time-limited assignments.     

Designing a control system for a multinational subsidiary

This article discusses how the control systems for multinational subsidiary managers are affected by national variables such as political risk, financial/monetary policies and relative cultural distance. These environmental factors are reviewed and synthesized into a three-dimensional model to help a manager diagnose these influences and choose the appropriate control system. This model illustrates how the salience of input control increases as multinational entities increasingly compete globally in nations with unstable financial/monetary policies, significant government restrictions and high cultural distance. Global expansion into countries with one or more of these will require multinational entities to pay added attention to how they recruit, train and reward subsidiary managers.     

Work–Family Conflict and the Senior Female International Manager

The particular focus of this paper is on the workÐfamily conflict experienced by senior female international managers within a European context. This research is particularly relevant as existing European studies have not specifically addressed issues pertaining to the senior female international manager. For the purpose of this study 50 senior female expatriate managers were interviewed, representing a wide diversity of industry and service sectors. The study establishes that work–family conflict still prevents many female managers from progressing to senior management. The results of the study show that the senior international career move has largely been developed along a linear male model of career progression, a development which, together with gender disparity both in organizations and family responsibilities, frequently prevents women employees from reaching senior managerial positions. The study extends work primarily in the international human resource management literature, while also contributing to the research literatures on women in management and career theory.     

Psychophysiological reactions during the first year of a foreign assignment: Results of a controlled longitudinal study

Abstract

Previous studies reveal that employees are exposed to several potential stressors during foreign assignments. This prospective multidisciplinary study followed managers (expatriate group) before and during their first year of an international work assignment. Concurrently, a matched reference group that did not relocate was observed. The secretion of the stress-sensitive hormone prolactin increased in the expatriate group during the first year abroad, compared to the reference group. Selfesteem, family relations, language skills, decreased internal locus of control and job promotion explained 32% of the variance in serum prolactin levels. Lower self-esteem and sense of coherence was related to increased serum prolactin. Increased working hours were associated with decreased work satisfaction. Job promotion was not related to work satisfaction. Mental well-being decreased in the expatriate group, compared to the reference group. Individual factors such as a strong sense of coherence and social provision attenuated decreases in mental well-being. A significant increase in cigarette and alcohol consumption was found in the expatriate group during the first year abroad. This study indicates that there are important psychosocial determinants influencing psychophysiological response patterns in expatriates. The present results put into question the generalizability of the ‘culture shock’ syndrome. The results have practical implications for guiding expatriates on time-limited assignments.     

The relative influence of country conditions, industry structure, and business strategy on multinational corporation subsidiary performance

Two competing theories of firm performance have been proposed in the business strategy literature, the industry structure view and the resource-based view of the firm. Empirical studies have estimated the relative contribution of industry structure, corporate, and business unit effects to business unit performance. These studies, however, have been restricted to using only single-country data. Missing from this debate is an international dimension that includes the relative importance of country conditions as a determinant of firm performance. The objective of this article is to fill this void by adding country characteristics to the analysis. Using cross-country data of four large multinationals in a single industry, we estimate the relative importance of country characteristics in addition to industry structure, corporate characteristics, and subsidiary strategy as determinants of subsidiary performance by using multiple regression analysis. This analysis also will contribute to the discussion on environmental determinism versus strategic choice. Country and industry characteristics are mainly outside the control of management, whereas corporate characteristics and subsidiary strategy are under management's control. Results show that country characteristics are by far the most important determinant of subsidiary performance, followed by industry structure, subsidiary strategy, and corporate characteristics. Thus, country conditions are a very important determinant of firm performance that so far has been overlooked in previous studies. These results indicate that subsidiary performance is determined mainly by conditions outside the control of subsidiary management. In terms of competing theories, these results support the environmental determinism view more than the strategic choice view and the resource-based view of the firm more than the industry structure view. These results also have important implications for multinational corporations' selection of countries for entry and investment and for performance evaluation of subsidiary management.     

On the emerging organizational culture of a Finnish company's Polish subsidiary

The following research note presents a brief account of ethnographic research conducted within a Polish subsidiary of an international company domiciled in Finland. Local employees' attitudes towards various aspects of the parent company's organizational culture are examined, and an attempt is made to capture emerging patterns of the subsidiary's organizational culture.     

The Management of Information and Managers in Subsidiaries of Multinational Corporations

A key challenge facing multinational corporations (MNCs) is how to encourage the development of firm specific advantages throughout the network of subsidiaries while maintaining global coherence. As a result, a critical task for top managers in the MNC is to structure the relationship between headquarters and subsidiaries. Thus, headquarters' control of subsidiary behaviour and performance becomes a central integrating function in the MNC. We examine first the relationship between the nationality of the MNC headquarters and its information management, namely the key performance metrics utilized by the parent to evaluate subsidiary performance. Second, we investigate the relationship between the MNC nationality and its management of managers, specifically, the transfer of parent company nationals and corporate acculturation. These questions are investigated in a study of MNC subsidiaries located in Australia, Ireland and Singapore. Our data provide strong evidence that MNCs of all nationalities place the greatest emphasis on financial metrics compared to other performance metrics. Moreover, there are differences in the degree of emphasis on performance metrics across MNC nationality. We found that Japanese and German MNCs place significantly less emphasis on financial measures than US and UK MNCs. Our hypotheses relating to the management of managers were also supported by the data. In comparison with all other MNC nationalities, Japanese MNCs place greater emphasis on the transfer of Japanese managers to overseas subsidiaries and less emphasis on corporate acculturation. While some researchers have argued that management control has become more isomorphic as a result of globalization, our results show that companies from different nationalities diverge in their practices.     

Isolated Foreign Subsidiary's Initiative in Knowledge Transfer Within the MNE

Knowledge transfer is an essential issue of strategic management in MNEs, because it enables them to utilize their strategic resources across borders. However, it is far from perfect, and there are isolated foreign subsidiaries that are excluded from the knowledge network within the MNE. A primary contribution of this paper is to shed light on a fact which such an isolated foreign subsidiary can initiate the internal knowledge transfer within the MNE, in order to overcome the liability of internal isolation. This paper analyzes such a subsidiary initiative, with an extreme case of a large Japanese ICT company's Finnish subsidiary, which initiated an adoption of its headquarters' strategic practice. I collected and analyzed data by ethnographic fieldwork in this subsidiary for over one year. After depicting the details of the initiation process, I show how the initiation process was influenced by the subsidiary managers' dual motivation; solving the liability of internal isolation, and keeping the advantage of isolation. I hope that this study would enrich theory building of subsidiary isolation and also contribute to subsidiary managers who have struggled with the liability of internal isolation.     

Fostering operational management “Best Practices” in subsidiary plants in the Western Balkans: The role of MNC home-country environment and resource allocation

We investigate the adoption of operational management “best practices” in multinational corporation (MNC) subsidiary plants in the Western Balkans. Building on the Practice-Based View (PBV), we suggest that subsidiary plants are more likely to operate according to widely recognized best practices, if these practices are already common in the MNC home country. We also examine the degree to which the MNC can facilitate best practices in their plants by allocating organizational and human resources. We test our hypotheses using survey data from subsidiary managers and secondary company data (n = 129), supplemented with manager interviews (n = 14), collected from European, U.S., and Asian MNCs with subsidiary plants in Bosnia and Herzegovina, Croatia, Serbia, and North Macedonia. Results indicate that the subsidiary plants adopt practices that are common in the MNC home country. They do so to a greater extent when the MNC commits organizational resources to the plants, such as codified written procedures and trainings. Contrary to our expectations, there is no benefit to allocating human resources, such as expatriates and business travelers. We provide insights into the transfer and implementation of best practices in the Western Balkan context, enhance our understanding of the PBV by presenting a specific application of this theoretical perspective, and provide practically relevant results for managers and policymakers.