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Consequences of expatriate top manager replacement on foreign subsidiary performance

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  • Bebenroth, Ralf
  • Froese, Fabian J.

Abstract

Integrating expatriate staffing and leadership succession literature, this study investigates the influence of expatriate top manager replacement on foreign subsidiary performance and the moderating effects of subsidiary context. Building on a refined understanding of agency theory and evidence from 2113 firm-year observations, including 260 expatriate successions, this study shows that when expatriates are replaced, regardless by whom (either host-country national or expatriate manager), the performance of the subsidiaries declines, suggesting that the departure of expatriate top managers often see subsidiaries being left in a less than favorable condition. If the subsidiary's prior performance has been unsatisfactory, the newly appointed expatriate might not be able to prevent further deterioration of its performance. Replacing expatriates with host-country national managers can help improve subsidiary performance, but this usually happens in older, more established subsidiaries. These findings framed in a refined agency theory provide us a more in-depth understanding of expatriate staffing failure.

Suggested Citation

  • Bebenroth, Ralf & Froese, Fabian J., 2020. "Consequences of expatriate top manager replacement on foreign subsidiary performance," Journal of International Management, Elsevier, vol. 26(2).
    • Handle: RePEc:eee:intman:v:26:y:2020:i:2:s1075425318301662
    DOI: 10.1016/j.intman.2019.100730
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    Cited by:

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    3. Eunbi Kim, 2023. "Top management staffing and subsidiary performance under home-country uncertainty," Asian Business & Management, Palgrave Macmillan, vol. 22(4), pages 1513-1543, September.
    4. Ralf Bebenroth, 2021. "Adjustment of Expatriates' Work Practices during the Covid-19 Pandemic," Discussion Paper Series DP2021-13, Research Institute for Economics & Business Administration, Kobe University, revised Mar 2022.
    5. Sana Mumtaz & Sadia Nadeem, 2022. "Understanding the Integration of Psychological and Socio-cultural Factors in Adjustment of Expatriates: An AUM Process Model," SAGE Open, , vol. 12(1), pages 21582440221, February.
    6. Patel, Parth & Varma, Arup & Sengupta, Santoshi & Prikshat, Verma & Park, HyunMi, 2022. "The international training of expatriates in Western subsidiaries of emerging multinational enterprises: A knowledge-based perspective," Journal of International Management, Elsevier, vol. 28(1).
    7. Kyuho Jin & Chulhyung Park & Jeonghwan Lee, 2020. "What Determines Innovative Performance of International Joint Ventures? Assessing the Effects of Foreign Managerial Control," Sustainability, MDPI, vol. 12(21), pages 1-20, October.

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