Abstract
Purpose - This study explores the link between the characteristics of MNE subsidiaries and their performance. Previous studies on subsidiaries’ performance have mostly focused on the linear relationship, while this study hypothesizes the non-linear effects of MNE subsidiaries’ local experience and staffing localization on their labor productivity. Design/Methodology/Approach - Using a panel data set of the Chinese subsidiaries of Korean firms from the Export-Import Bank of Korea from 2006 to 2013, the hypotheses are tested. 1,421 subsidiaries (4,946 observations) are used for final analysis. Findings - The results of the fixed effect panel analysis show the inverted u-shaped relationship between explanatory variables and labor productivity. Moreover, the non-linear effect of local experience is less profound in larger firms. Research Implications - Unlike existing studies based on linear models, this study indicates the nonlinear effects of the local experience and staffing localization on labor productivity. For practical implications, these findings suggest the need to balance the strategy between global integration and local responsiveness pressure.
Published Version
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