International Mnc Essay

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* (+) denotes a positive relationship. Example: + Size = the larger the organization the higher is the likelihood that a PCN holds the managing director position in its foreign subsidiaries.

With regard to parent country/company characteristics, MNCs from countries with anational culture that scores high on uncertainty avoidance (Hofstede, 1980, 2001) have ahigher tendency to employ PCNs as managing directors for their subsidiaries. There is oftensuspicion towards foreigners as managers and a view that initiative arising from subordinatesshould be kept under control. Managers are expected to be experts in their fields and generallyare selected based on seniority (Hofstede, 1980, 2001). These characteristics usually point to atrusted PCN as the preferred alternative for senior positions in subsidiaries. Direct control ofsubsidiary operations will also be more important if the level of cultural distance, orinstitutional distance (Gaur, Delios, & Singh, 2007) between home and host country is high.

In this case, HQ managers might not trust the information they receive from local managers.Additionally, HQ managers might fear that local managers are less committed to thecompany. However, Gong (2003a) found that the reliance on PCNs in cases of high cultural distance weakens over time, suggesting that MNCs’ longer presence in a host country maylead to the development of trust relationships with HCNs and thus a reduced need to deployPCNs. Furthermore, communication between people from different cultural backgrounds canbe very difficult (even if they speak the same language) and the opportunity formisunderstanding is usually high (Marschan-Piekkari, Welch, & Welch, 1999). Therefore, HQ managers will prefer to have at least some home country managers in important positionsto facilitate the information flow. Larger MNCs have more PCNs as managing directors since they have more managerial resources and are more likely to have a formal management development program in operation that involves the transfer of managers around the world. MNCs with a researchintensive product are more likely to feel the need to transfer at least some of this knowledge totheir subsidiaries and to train local managers (Hamill, 1989). Whereas Harzing did not findsupport for this relationship, Tan and Mahoney (2002) showed that R&D intensity didincrease the number of PCNs for Japanese firms, although not the likelihood of a PCN asmanaging director. This is probably due to the fact that R&D knowledge is transferred mainlyby technical specialists rather than by the managing director.

  More recent research has highlighted the role of MNC competitive strategy forsubsidiary staffing (Tarique, Schuler, & Gong, 2006). Whereas MNCs with a global strategyare more likely to staff their subsidiaries with a focus on PCNs or HCNs/TCNs that have beensocialized at the HQ, MNCs with a multidomestic strategy will concentrate on HCNs whohave been socialized at the host-country subsidiary. This influence is likely to be moderatedby parent-country cultural dimensions, the cultural similarity between parent and subsidiarycountry, and the managerial orientation at the HQ. For example, MNCs with a multidomesticstrategy will more likely staff their culturally dissimilar subsidiaries with HCNs that havebeen socialized at the HQ. Similarly, MNCs with a global strategy and a polycentric managerial orientation will more likely staff their subsidiaries with HCNs that have beensocialized at the HQ.

With regard to the influence of the industry, only those with a significantly higher orlower level of PCNs as managing director are included in this model. A high percentage ofPCNs as managing director is found in the financial services and printing & publishing, whilea low percentage of expatriates is found in the advertising industry, the computers & officeequipment industry, the electronic & electric equipment industry, and the food industry. Someof the industry effects are easily explained. The control aspect will lead companies to employa large percentage of PCNs in financial services, while the importance of knowledge of thelocal market will lead companies to employ a large percentage of HCNs in advertising and thefood industry. The results for the other industries are less straightforward and would meritfurther investigation in a more controlled sample.