Parent-subsidiary temporal closeness and expatriate staffing: the communication synchronicity effect

Abstract

This study draws insights from media synchronicity theory (MST) to understand why and how temporal closeness between multinational enterprise (MNE) parent and subsidiary locations may affect MNEs’ employment of expatriates in their foreign subsidiaries. Parent-subsidiary temporal closeness, indicated by the working time overlap between the parent and subsidiary location, determines the extent to which synchronicity can be achieved in day-to-day communication directly at a distance. Such communication synchronicity enables MNE parents to excise control and maintain effective knowledge exchange with subsidiaries without having to rely on costly expatriates. As such, we posit a negative relationship between parent-subsidiary temporal closeness and the deployment of expatriates in a subsidiary, such that the expatriate ratio decreases with an increase of overlapping working time between the parent and subsidiary location. Furthermore, we posit that the negative relationship can be further moderated by factors enabling or constraining parent-subsidiary synchronous communication such as digital accessibility and linguistic distance. Empirical analyses of a sample of 3,500 subsidiaries of 1,801 Japanese MNEs between 1990 and 2009 support our theorizing. Theoretical and practical implications for MNEs’ global operations are discussed.