Host Country Managers Research Articles

Subsidiary staffing, location choice, and shareholder rights effectiveness

Institutional differences between countries influence strategic choices and performance of international businesses, but the unintended effects of legal institutions on firm legitimacy have received less attention. We argue that, while minority shareholder rights protection in an investment location does not directly protect shareholder interests abroad, the normative and mimetic effects it has on host country managers can mitigate agency problems. Using Japanese FDI established between 1986 and 2013 we find that (a) subsidiaries established in host countries with higher shareholder rights protection employ a smaller proportion of Japanese expatriates, (b) shareholder rights protection enhances a country’s FDI attractiveness, and (c) that the impacts of shareholder rights protection on expatriate ratio and location attractiveness are stronger when firm ownership is concentrated among exchange-listed firms. This research contributes to the literature on institutional difference in international business, in particular by highlighting the value of studying the imprinting effects of regulations.

Betwixt and Between: National and Organizational Identification of Host Country Managers Working in MNE Subsidiaries

Betwixt and Between: National and Organizational Identification of Host Country Managers Working in MNE Subsidiaries

National Identity, Othering and Resistance: Host Country Manager’s Experience at a Japanese Multinational Enterprise in India

National identity has been found to be a basis for othering and resistance in host country managers at multinational enterprises overseas’ affiliates. An original model of employee’s resistance using national identity has developed a nuanced understanding of how resistance manifests. This research tests this original model in a multinational enterprise’s office in the emerging market and power distance accepting India. A case study design was adopted. Interpretive analysis of the data indicates that the newly developed model could apply to Indian situations, and collateral inductive reasoning proposes a further refinement to this model. Thus, besides verbal othering, it is found that the use of space and rituals can also be used in the acts of resistance and further it is proposed that such acts are not necessarily continuous, but can manifest intermittently. Hence, the practising international human resources manager now has a broader lens to assess resistance manifestation, facilitating sooner remedial countermeasures. The cross-cultural study is among the pioneers in studying national identity as a means of resistance in a power distance accepting context in general, and the under-researched advanced economy, emerging market Japan–India international business dyad specifically. It contributes to cross-cultural management (CCM) literature by surfacing the darker side of globalization—the power retained by the parent company and concomitant subordination of the host country manager that results in resistance. This study adds to the under-researched India–Japan global business scholarship.

Governance, Once Removed: Shareholder Rights Effectiveness vs. Expatriate Deployment

We investigate the impact of host-country shareholder rights protection on location and governance modes of Japanese foreign direct investment (JFDI). Agency theory predicts that strong shareholder rights protection in host countries should not increase location attractiveness nor impact entry and governance mode decisions, as foreign shareholders are outside the jurisdiction of host country laws. However, informal institutional mechanisms, including managerial bonding and isomorphic pressures, as predicted by institutional theory, may create indirect control over host country managers which reduces agency costs. Hence, we predict that higher shareholder rights protections will enhance a potential host country’s JFDI attractiveness, and that subsidiaries established in host countries with higher shareholder rights protection will employ fewer Japanese expatriates. We find support for our predictions based on a sample of JFDI established between 1986 and 2012.

Moderating effects of decision autonomy and culture novelty on the relationship between expatriate manager leadership styles and host country managers’ job satisfaction: Evidence from the global hotel industry

While the use of expatriate managers to control and manage the foreign subsidiary is well recognized, there is a paucity of literature that considers how expatriate managers’ leadership behaviors affect host country nationals (HCNs). By incorporating leadership contingency perspective into expatriation literature, we examine the boundary conditions of two leadership (planning and consulting) behaviors on HCN managers’ job attitude (i.e., job satisfaction). Specifically, we investigate the moderating effects of decision autonomy and culture novelty of expatriate managers on the aforementioned relationships, using survey data collected from 103 expatriate general managers and 276 HCN managers working in nine American-based multinational hotel chains and found both planning and consulting leadership behaviors to be positively related to HCN managers’ job satisfaction. Decision autonomy and culture novelty acted as boundary conditions of such relationships such that decision autonomy moderated the planning-job satisfaction relationship while culture novelty moderated the consulting-job satisfaction relationship.

The Role of the Manager in the Middle East: An Empirical Study of Multinational Companies

This article is an empirical investigation into the role of the CEO manager in the affiliates of multinational corporations operating in the Middle East. Grounded in a literature review of the reasons for employing either parent country nationals (PCNs) or host country nationals (HCNs) in top management position in foreign subsidiaries, a number of factors influencing the choice between these alternatives are identified. Using a data collected from 147 multinational companies (MNCs) operating in the Kingdom of Saudi Arabia (KSA), the influence of each of these factors on this selection is empirically tested with the help of primary data. The study proposed that the relationship between the home and host country managers could be linked to agency theory (with the ‘classical’ principal–agent relationship) and to resource dependency theory (implying relations between the branch and other partners based on interdependence). Our results show that the agency and resource dependency mechanisms are indeed used side by side and complementary to each other to exercise control. Home country managers can strategize to implement control by the informal and social means by positioning a sizeable number of managers from the home country within the subsidiary. Indeed, our results revealed this as true.

The acculturative stress of host country managers working at MNC subsidiaries: Determinants and effects

This paper introduces the concept of acculturative stress to indicate a distinct psychological difficulty faced by host country managers working at multinational corporation (MNC) subsidiaries. Drawing on the social identity and self-verification theories, we suggest that host country managers are exposed to acculturative stress due to the challenges they face in verifying their national cultural identity. We identify the perceived cultural incongruence and the lower relative standing of host country managers as proximal determinants of acculturative stress and examine its negative impact on their work engagement. The analysis results of a sample of 643 Korean managers working at 60 MNC subsidiaries in Korea support our hypotheses on the determinants and effects of acculturative stress.

Foreign versus local managers: Finding the perfect leaders for multinational hotel subsidiaries

Selection of senior managers in multinational corporations (MNCs) is a pivotal management decision that takes place within their subsidiaries. However, multinational corporation subsidiaries frequently encounter challenges in selecting host country managers that meet corporate qualification requirements. Thus, the aim of this study is to explore management practices in the selection process of senior managers within MNC subsidiaries. Particularly, this study provides an in-depth understanding of how the selection process affects the MNC subsidiaries in their human resource planning and management. Using a qualitative approach, semi-structured interviews were conducted in the context of international hotel subsidiaries in Jakarta, Indonesia. The interviews involved four different actors: expatriate (foreign) managers, local managers, regional executives and policy makers. The results reveal that the selection process of senior managers deviates from management ideal best practice, and that in this context, most senior managers are selected due to personal characteristics rather than their abilities.

Qualitative research: deductive and inductive approaches to data analysis

PurposeThe purpose of this paper is to explain the rationale for choosing the qualitative approach to research human resources practices, namely, recruitment and selection, training and development, performance management, rewards management, employee communication and participation, diversity management and work and life balance using deductive and inductive approaches to analyse data. The paper adopts an emic perspective that favours the study of transfer of human resource management practices from the point of view of employees and host country managers in subsidiaries of western multinational enterprises in Ghana.Design/methodology/approachDespite the numerous examples of qualitative methods of data generation, little is known particularly to the novice researcher about how to analyse qualitative data. This paper develops a model to explain in a systematic manner how to methodically analyse qualitative data using both deductive and inductive approaches.FindingsThe deductive and inductive approaches provide a comprehensive approach in analysing qualitative data. The process involves immersing oneself in the data reading and digesting in order to make sense of the whole set of data and to understand what is going on.Originality/valueThis paper fills a serious gap in qualitative data analysis which is deemed complex and challenging with limited attention in the methodological literature particularly in a developing country context, Ghana.

The relationship between MNCs’ strategies and executive staffing

PurposeThe purpose of this paper is to examine the relationship of business strategies with executive staffing of multinational companies (MNCs).Design/methodology/approachBased on in-depth interviews conducted with top executives of 22 MNCs’, the authors identify important connections between international business strategies and staffing orientation. The authors used the qualitative research approach of building theory from interviews; thus, creating theoretical propositions from empirical evidence.FindingsThe authors find that when the pressure for global integration is high, MNCs use more parent-country national (PCNs) (ethnocentric staffing) as against the use of host-country managers (HCNs) (polycentric staffing) when this pressure is low. Additionally, MNCs using a global strategy are more likely to use an ethnocentric staffing approach, those using a multi-domestic strategy use a polycentric approach and firms using transnational strategy adopt a mix of ethnocentric and polycentric approaches.Research limitations/implicationsAlthough the authors derive theoretical patterns based on rich qualitative data, their sample is relatively small and comprises mostly of French MNCs. Generalizability to a broader context is limited. However, the authors’ findings have critical implications for future research.Practical implicationsThe authors’ findings provide critical managerial implications for MNCs in matching their HR strategies with business strategies. These are important for effective strategy implementation.Originality/valueAlthough MNC staffing orientations have been studied for a long time, their relationship to international business strategies is still not clearly understood. The authors contribute to the literature by investigating the relationship between MNCs’ business strategy types with staffing orientations.

The impact of foreign ownership and control on the organizational identification of host country managers working at MNC subsidiaries

This study builds on social identity and self-categorization theories to examine how foreign ownership and control affect the organizational identification (OI) of host country national managers working at local subsidiaries of multinational corporations (MNCs). We suggest that the degree of foreign ownership and the extent of the foreign parent’s control over the subsidiary have negative effects on the strength with which the host country managers identify with the foreign-owned firm. The results from analyses of a sample of 428 Korean managers working at 43 MNC subsidiaries in Korea demonstrate the negative relationships between foreign ownership share and control, as exerted through mechanisms such as the centralization of decision-making authority by foreign headquarters and the assignment of expatriates to subsidiaries, and the OI of the host country managers. In addition, we found that the extent to which the foreign firm is perceived as being socially responsible within the host country mitigates the negative impact of foreign ownership and control on the OI of the host country managers.

The impact of cultural intelligence on communication effectiveness, job satisfaction and anxiety for Chinese host country managers working for foreign multinationals

Cultural intelligence (CQ) is an important construct attracting growing attention in academic literature and describing cross-cultural competencies. To date, researchers have only partially tested the relationship between CQ and its dependent variables, such as performance. In this study, the relationship between CQ and communication effectiveness and job satisfaction is measured in a sample of 225 Chinese managers working for foreign multinational enterprises in China. The results show that CQ plays an important role in reducing anxiety and influencing both communication effectiveness and job satisfaction positively. Another outcome is the unexpected influence of anxiety on job satisfaction but not on communication effectiveness. These findings contribute to the development of theory with regard to the CQ construct.

Valuing Japan-based German expatriate and local manager's functions: do subsidiary age and managerial perspectives matter?

Managerial functions valued by expatriates and reasons for appointing host country managers were examined in an exploratory, multimethod (interview and questionnaire) study with expatriates and local managers as the respondents. Based on theoretical perspectives of agency theory, transaction costs theory, resource-based views and organizational learning theory, changes in the valuation of these functions were hypothesized and examined for subsidiary age and nationality of the respondent. Expatriate and local managers' views supported previous research on certain management functions but differed on others (e.g. management development). The data indicated curvilinear relationships for a number of managerial functions between nationality of top manager and age of the subsidiary. Strategic factors were analysed by subsidiary age and nationality of the respondent manager to understand more about maturity of host company operations and strategic orientations. The results indicated the growth in the strategic functions of technological leadership and market development/branding in older subsidiaries. Implications of the results were discussed.

When two African cultures collide: A study of interactions between managers in a strategic alliance between two African organizations

This paper explores the interaction between managers from two African countries. Using a case study of a strategic alliance between a South African multinational organisation and a local firm in the Democratic Republic of Congo, we examine procedural justice and interactional justice between managers from the two firms. Host country managers reported higher levels of procedural and interactional injustice than South African managers. Further, the results indicate that top management teams from both firms were more willing to work together than lower level managers.

The Diffusion of Employment Practices in Multinationals: `Americanness' within US MNCs in Spain?

Drawing on several theoretical perspectives, including institutionalism and strategic choice, this article examines the impact of home and host country national business systems on the diffusion of human resource management practices by American multinational corporations to their subsidiaries in Spain. Our evidence suggests that the tight control that American multinational corporations usually exert over their subsidiaries has recently increased. In most of the case studies, successful implementation of corporate human resource policies has mainly been achieved due to the degree of malleability and openness that characterized the Spanish business system. However, increased control also reflects the legitimacy given to managerial human resource practices originating in the USA and the willingness of host country managers to implement corporate policy. To this extent, it can be argued that subsidiary management plays a critical role in the configuration and implementation of human resource management and industrial relations policies and practices in multinational corporations.

A contingency model to promote the effectiveness of expatriate training

PurposeThe purpose of this study is to evaluate the influences of expatriate characteristics, complexity of task assignment and perceived cross‐cultural differences on needs for expatriate training, and expatriate training effectiveness and to evaluate the influences of the fit between the expatriate's learning style and instructor's teaching modes on training effectiveness.Design/methodology/approachSurvey methodology was adopted to obtain data from the opinions of expatriates in foreign companies within Taiwan and China. Quantitative data were used to answer the research questions. A total of 400 foreign companies, with 200 in Taiwan and 200 in China, were selected as the survey sample. Hierarchical regression analyses were adopted to test the five research questions as developed in this study.FindingsThe study results revealed that expatriates' perceived needs for training were negatively influenced by competence and adaptability to work in the overseas assignment. Expatriates' perceived needs for expatriation training were also influenced by the complexity of the task assignment, capability of host country managers, and the perceived cross‐culture differences between the home country and host country. Furthermore, the levels of fit between expatriate learning preferences and the instructor's teaching methods did moderate the relationship between the need for expatriate training and the effectiveness of such training.Research limitations/implicationsFirst, since this study adopts cross‐sectional research design and examines the opinions of expatriates at one point in time, directional relationships may not be clear. It is recommended that future research conduct longitudinal studies to confirm the findings of this study. Second, due to the constraints of time and resources, the samples of this study are limited to expatriates working for foreign firms in Taiwan and in China. The generalization of the study results should thus be interpreted with appropriate caution. It is recommended that the same questionnaire, or an abbreviated form, could be used for expatriates in other countries, such as expatriates of multinational subsidiaries with US, Japanese, and European investment origins. Additional research will further confirm the validity and generalizability of the findings.Originality/valueThe training of expatriates has been recognized as one of the key elements for the success of business globalization. However, the evaluation of the effectiveness of training and development for overseas expatriates has remained largely unclear. The results of this study enabled one to understand how relevant contingency factors influence expatriate training needs and effectiveness. These findings could provide importance references for academics and practitioners when deciding on business practices.

Examining the overseas staffing options utilized by Australian headquartered multinational corporations

MNCs need to use a range of options to manage their international operations. The aim of this study was to enhance understanding of how MNCs staff international management positions using a sample of top Australian MNCs across a range of industries. The rationales executives gave for their MNCs' staffing of international management supported selecting managers with higher competency levels for complex overseas assignments. Staffing options were chosen to reduce risks from cultural friction, divergent goals, and asymmetry in knowledge between the parent company and the host operation, chiefly through staffing by parent country nationals (i.e. long-term expatriates, Australians or Westerners already living in the host country or abroad, domestic international managers). Host country managers were used to reduce risks that arose from not being responsive to the host environment and to avoid costs, and when they were least risky to the firm. By contrast, the staffing options also served practical purposes, including deploying expatriate managers to provide skills (competencies) and, less frequently, to develop managers for future management positions in the organization.

International Dividend Repatriations

Income earned by the branches and subsidiaries of multinational firms can be either reinvested in the host country or repatriated as dividends to the firms` headquarters. Despite the rapid growth of foreign direct investment in the 1990s, there has been relatively limited analysis of the dividend behavior of multinationals. We find that investors in multinationals from the two largest foreign-investing countriesthe United Kingdom and the United Statesrequire a steady flow of dividends, consistent with a view that such regular dividend payments are a mechanism through which to discipline host-country managers. In contrast, German investors, who tend to invest in riskier countries, do not appear to demand persistent dividend payments. Changes in income also influence dividends. This payout ratio from income appears, for example, to be lower for less risky countries. Finally, the evidence suggests that dividend payments do not necessarily aggravate the balance of payments position during crises.

International Dividend Repatriations

Income earned by the branches and subsidiaries of multinational firms can be either reinvested in the host country or repatriated as dividends to the firms' headquarters. Despite the rapid growth of foreign direct investment in the 1990s, there has been relatively limited analysis of the dividend behavior of multinationals. We find that investors in multinationals from the two largest foreign- investing countries-the United Kingdom and the United States-require a steady flow of dividends, consistent with a view that such regular dividend payments are a mechanism through which to discipline host-country managers. In contrast, German investors, who tend to invest in riskier countries, do not appear to demand persistent dividend payments. Changes in income also influence dividends. This payout ratio from income appears, for example, to be lower for less risky countries. Finally, the evidence suggests that dividend payments do not necessarily aggravate the balance of payments position during crises.

Performance Management in MNC Subsidiaries in China: A Study of Host-country Managers and Professionals

Employees’ attitudes towards the organization's performance management (PM) system are crucial for its effectiveness. However, little research has been conducted on (western) PM in multinational companies’ (MNCs) subsidiaries operating in foreign cultures. This study examines host-country employees’ attitudes towards several elements of PM in a European MNC's subsidiaries in China. A survey approach yielded 604 host-country employee responses from geographically dispersed subsidiaries in China. The results demonstrate that Chinese managerial and professional employees are satisfied with (western) PM. Moreover, the results reveal that Chinese employees are especially satisfied with PM oriented towards their short- and long-term development. In addition, Chinese employees prefer to participate in setting their performance objectives and to receive formal performance feedback. This article proposes that current characteristics of the labour market available to MNCs in China and a general converging trend towards more career-oriented individualistic values may explain Chinese employees’ attitudes towards PM.