Samina Karim, Boston University
Samina Karim, Boston University
Managing Uncertainty: Executive Appointments In Foreign Subsidiary Environments
Managing Uncertainty: Executive Appointments In Foreign Subsidiary Environments
Abstract: This study examines how MNCs use strategic human capital appointments in the subsidiary executive team to manage tension between effective monitoring and local knowledge utilization when faced with subsidiary environment uncertainty. Using a sample of executives from 75 foreign subsidiaries of 34 U.S. and European banks over 5 years, we find that MNCs appear to seek balance through a deliberate configuration of expatriates and local executives in the subsidiary executive team. Overall, we find that MNCs are unlikely to appoint local executives to monitoring and control-oriented functional roles, but this effect is counterbalanced by a greater preference for local executives in implementation-oriented functional roles. After controlling for the strong effect of functional role, greater environmental uncertainty is associated with a higher likelihood of appointing local executives. Extending our research beyond the local executive/expatriate dichotomy, we find that distance dimensions differentially impact MNCs’ preference for executives with bicultural and multicultural experience. While increased economic distance is linked to a greater preference for bicultural executives, greater administrative, cultural, and geographic distance decreases MNCs’ propensity to appoint bicultural and multicultural executives to subsidiary executive teams.
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