IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v142y2022icp562-571.html
   My bibliography  Save this article

Cultural diversification, human resource-based coordination, and downside risks of multinationality

Author

Listed:
  • Song, Sangcheol

Abstract

We take the multinational operational flexibility perspective to examine how human resource-based coordination allows multinational corporations to retain the flexibility value of multinationality in diverse cultures among host countries. We posit that home national expatriates, host country specialists, and cross-cultural training programs within the same company network promote cultural understanding, facilitate effective coordination, and consequently curb downside risks of multinationality. By employing the Tobit two-stage model on a large sample of Korean multinational corporations, we find that a broader existence of three human resource programs help curbing downside risks, and the downside risk reduction effect is stronger under high cultural diversification. These findings imply the positive roles of cross-cultural coordinative mechanisms in retaining the flexibility value of multinationality.

Suggested Citation

  • Song, Sangcheol, 2022. "Cultural diversification, human resource-based coordination, and downside risks of multinationality," Journal of Business Research, Elsevier, vol. 142(C), pages 562-571.
    • Handle: RePEc:eee:jbrese:v:142:y:2022:i:c:p:562-571
    DOI: 10.1016/j.jbusres.2022.01.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S014829632200011X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2022.01.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Siew Meng Leong & Chin Tiong Tan, 1993. "Managing Across Borders: An Empirical Test of the Bartlett and Ghoshal [1989] Organizational Typology," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(3), pages 449-464, September.
    2. Linda Allen & Christos Pantzalis, 1996. "Valuation of the operating Flexibility of Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(4), pages 633-653, December.
    3. Heather Berry & Mauro F Guillén & Nan Zhou, 2010. "An institutional approach to cross-national distance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1460-1480, December.
    4. Sangcheol Song, 2015. "Inter-Country Exchange Rates and Intra-Firm Trade Flow Within Global Network of Multinational Corporations," Management International Review, Springer, vol. 55(1), pages 1-22, February.
    5. Chris Changwha Chung & Hye Youn Park & Jeoung Yul Lee & Kwanghyun Kim, 2015. "Human capital in multinational enterprises: Does strategic alignment matter?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(7), pages 806-829, September.
    6. Dale Griffin & Omrane Guedhami & Chuck C Y Kwok & Kai Li & Liang Shao, 2017. "National culture: The missing country-level determinant of corporate governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 740-762, August.
    7. Arnd Huchzermeier & Morris A. Cohen, 1996. "Valuing Operational Flexibility Under Exchange Rate Risk," Operations Research, INFORMS, vol. 44(1), pages 100-113, February.
    8. René Belderbos & Tony W. Tong & Shubin Wu, 2020. "Portfolio configuration and foreign entry decisions: A juxtaposition of real options and risk diversification theories," Strategic Management Journal, Wiley Blackwell, vol. 41(7), pages 1191-1209, July.
    9. Lenn Gomes & Kannan Ramaswamy, 1999. "An Empirical Examination of the Form of the Relationship Between Multinationality and Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 173-187, March.
    10. Schuler, Randall S. & Jackson, Susan E. & Tarique, Ibraiz, 2011. "Global talent management and global talent challenges: Strategic opportunities for IHRM," Journal of World Business, Elsevier, vol. 46(4), pages 506-516, October.
    11. D Minbaeva & T Pedersen & I Björkman & C F Fey & H J Park, 2003. "MNC knowledge transfer, subsidiary absorptive capacity, and HRM," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(6), pages 586-599, November.
    12. Yaping Gong & Oded Shenkar & Yadong Luo & Mee-Kau Nyaw, 2005. "Human resources and international joint venture performance: a system perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(5), pages 505-518, September.
    13. Morck, Randall & Yeung, Bernard, 1991. "Why Investors Value Multinationality," The Journal of Business, University of Chicago Press, vol. 64(2), pages 165-187, April.
    14. Nitin Nohria & Sumantra Ghoshal, 1994. "Differentiated fit and shared values: Alternatives for managing headquarters‐subsidiary relations," Strategic Management Journal, Wiley Blackwell, vol. 15(6), pages 491-502, July.
    15. Dan V Caprar, 2011. "Foreign locals: A cautionary tale on the culture of MNC local employees," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(5), pages 608-628, June.
    16. Anne-Wil Harzing, 2000. "An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(1), pages 101-120, March.
    17. Christos Pantzalis & Betty J Simkins & Paul A Laux, 2001. "Operational Hedges and the Foreign Exchange Exposure of U.S. Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(4), pages 793-812, December.
    18. Yuping Zeng & Oded Shenkar & Seung-Hyun Lee & Sangcheol Song, 2013. "Cultural differences, MNE learning abilities, and the effect of experience on subsidiary mortality in a dissimilar culture: Evidence from Korean MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(1), pages 42-65, January.
    19. Xinming He & Jianhong Zhang & Jinmeng Wang, 2015. "Market Seeking Orientation and Performance in China: The Impact of Institutional Environment, Subsidiary Ownership Structure and Experience," Management International Review, Springer, vol. 55(3), pages 389-419, June.
    20. Laszlo Tihanyi & David A Griffith & Craig J Russell, 2005. "The effect of cultural distance on entry mode choice, international diversification, and MNE performance: a meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(3), pages 270-283, May.
    21. Bradley L Kirkman & Kevin B Lowe & Cristina B Gibson, 2006. "A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(3), pages 285-320, May.
    22. Tung, Rosalie L., 2016. "New perspectives on human resource management in a global context," Journal of World Business, Elsevier, vol. 51(1), pages 142-152.
    23. Charles Dhanaraj & Paul W. Beamish, 2004. "Effect of equity ownership on the survival of international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 25(3), pages 295-305, March.
    24. Anne Kristin Hoenen & Tatiana Kostova, 2015. "Utilizing the broader agency perspective for studying headquarters–subsidiary relations in multinational companies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(1), pages 104-113, January.
    25. Anil K. Gupta & Vijay Govindarajan, 2000. "Knowledge flows within multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 21(4), pages 473-496, April.
    26. Alan Rugman & Alain Verbeke & Wenlong Yuan, 2011. "Re‐conceptualizing Bartlett and Ghoshal's Classification of National Subsidiary Roles in the Multinational Enterprise," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 253-277, March.
    27. Kwok Leung & Michael W Morris, 2015. "Values, schemas, and norms in the culture–behavior nexus: A situated dynamics framework," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(9), pages 1028-1050, December.
    28. David J Teece, 2014. "A dynamic capabilities-based entrepreneurial theory of the multinational enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(1), pages 8-37, January.
    29. René Belderbos & Jianglei Zou, 2009. "Real options and foreign affiliate divestments: A portfolio perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(4), pages 600-620, May.
    30. Knight, Gary A. & Liesch, Peter W., 2016. "Internationalization: From incremental to born global," Journal of World Business, Elsevier, vol. 51(1), pages 93-102.
    31. Obadia, Claude & Bello, Daniel C., 2019. "How to select an export mode without bias," Business Horizons, Elsevier, vol. 62(2), pages 171-183.
    32. repec:fth:michin:282 is not listed on IDEAS
    33. Charles Y. Tang & Surinder Tikoo, 1999. "Operational flexibility and market valuation of earnings," Strategic Management Journal, Wiley Blackwell, vol. 20(8), pages 749-761, August.
    34. Driouchi, Tarik & Bennett, David, 2011. "Real options in multinational decision-making: Managerial awareness and risk implications," Journal of World Business, Elsevier, vol. 46(2), pages 205-219, April.
    35. Ioulianou, Sophocles & Trigeorgis, Lenos & Driouchi, Tarik, 2017. "Multinationality and firm value: The role of real options awareness," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 77-96.
    36. Luis R Gómez-Mejia & Leslie E Palich, 1997. "Cultural Diversity and the Performance of Multinational Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(2), pages 309-335, June.
    37. Doukas, John A. & Pantzalis, Christos, 2003. "Geographic diversification and agency costs of debt of multinational firms," Journal of Corporate Finance, Elsevier, vol. 9(1), pages 59-92, January.
    38. Nan Zhou & Mauro F. Guillén, 2015. "From home country to home base: A dynamic approach to the liability of foreignness," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 907-917, June.
    39. David G Sirmon & Peter J Lane, 2004. "A model of cultural differences and international alliance performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(4), pages 306-319, July.
    40. Aabo, Tom & Pantzalis, Christos & Sørensen, Helle & Toustrup, Malene Teilmann, 2016. "Corporate risk and external sourcing: A study of Scandinavian multinational firms," International Business Review, Elsevier, vol. 25(6), pages 1297-1308.
    41. Shimoni, Baruch, 2011. "The representation of cultures in international and cross cultural management: Hybridizations of management cultures in Thailand and Israel," Journal of International Management, Elsevier, vol. 17(1), pages 30-41, March.
    42. Fisch, Jan Hendrik & Zschoche, Miriam, 2011. "Do firms benefit from multinationality through production shifting?," Journal of International Management, Elsevier, vol. 17(2), pages 143-149, June.
    43. Glenn Hoetker, 2007. "The use of logit and probit models in strategic management research: Critical issues," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 331-343, April.
    44. Harry G Barkema & Rian Drogendijk, 2007. "Internationalising in small, incremental or larger steps?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(7), pages 1132-1148, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Song, Sangcheol, 2021. "When do multinational corporations adjust production volume flexibly among in-network subsidiaries?," Journal of Business Research, Elsevier, vol. 135(C), pages 532-542.
    2. Sangcheol Song, 2013. "FDI Structure, Investment Specificity, and Multinationality Value under Host Market Uncertainty," Management International Review, Springer, vol. 53(6), pages 795-817, December.
    3. Song, Sangcheol, 2023. "Multinational operational flexibility, within-network redundancy, and downside risks and divestment rates of international investments," International Business Review, Elsevier, vol. 32(1).
    4. Song, Sangcheol, 2021. "Do in-network ties help in lowering subsidiary divestment rates under environmental challenges?," Journal of Business Research, Elsevier, vol. 128(C), pages 257-265.
    5. Song, Sangcheol, 2022. "Determining investment size and local embeddedness under host market uncertainty and growth rates," International Business Review, Elsevier, vol. 31(2).
    6. Srivastava, Saurabh & Singh, Shiwangi & Dhir, Sanjay, 2020. "Culture and International business research: A review and research agenda," International Business Review, Elsevier, vol. 29(4).
    7. Danchi Tan & Weichieh Su & Joseph T. Mahoney & Yasemin Kor, 2020. "A review of research on the growth of multinational enterprises: A Penrosean lens," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 498-537, June.
    8. Sangcheol Song & Jeoung Yul Lee, 2017. "Relationship with Headquarters and Divestments of Foreign Subsidiaries: The Hysteresis Perspective," Management International Review, Springer, vol. 57(4), pages 545-570, August.
    9. Sangcheol Song, 2017. "Ownership Increase in International Joint Ventures: The Within- and Across-Country Flexibility Perspective," Management International Review, Springer, vol. 57(1), pages 93-120, February.
    10. Sangcheol Song, 2014. "Subsidiary Divestment: The Role of Multinational Flexibility," Management International Review, Springer, vol. 54(1), pages 47-70, February.
    11. Song, Sangcheol, 2014. "Unfavorable Market Conditions, Institutional and Financial Development, and Exits of Foreign Subsidiaries," Journal of International Management, Elsevier, vol. 20(3), pages 279-289.
    12. Jingoo Kang & Jeoung Yul Lee & Pervez N. Ghauri, 2017. "The Interplay of Mahalanobis Distance and Firm Capabilities on MNC Subsidiary Exits from Host Countries," Management International Review, Springer, vol. 57(3), pages 379-409, June.
    13. Song, Sangcheol & Lee, Seung-Hyun & Makhija, Mona, 2015. "Operational hedging in foreign direct investments under volatile and divergent exchange rates across countries," Journal of World Business, Elsevier, vol. 50(3), pages 548-557.
    14. Song, Sangcheol, 2015. "Exchange rate challenges, flexible intra-firm adjustments, and subsidiary longevity," Journal of World Business, Elsevier, vol. 50(1), pages 36-45.
    15. Song, Sangcheol, 2020. "Actualization of growth potential in international joint ventures: The moderating effects of localization strategies," Journal of World Business, Elsevier, vol. 55(2).
    16. Song, Sangcheol, 2023. "Portfolio ownership, production shifts, and downside risks: Evidence from Korea," Journal of Business Research, Elsevier, vol. 155(PA).
    17. Sangcheol Song, 2015. "Inter-Country Exchange Rates and Intra-Firm Trade Flow Within Global Network of Multinational Corporations," Management International Review, Springer, vol. 55(1), pages 1-22, February.
    18. Aggarwal, Raj & Berrill, Jenny & Hutson, Elaine & Kearney, Colm, 2011. "What is a multinational corporation? Classifying the degree of firm-level multinationality," International Business Review, Elsevier, vol. 20(5), pages 557-577, October.
    19. García-García, Raquel & García-Canal, Esteban & Guillén, Mauro F., 2017. "Rapid internationalization and long-term performance: The knowledge link," Journal of World Business, Elsevier, vol. 52(1), pages 97-110.
    20. Sjoerd Beugelsdijk & Tatiana Kostova & Vincent E. Kunst & Ettore Spadafora & Marc van Essen, 2018. "Cultural Distance and Firm Internationalization," Post-Print hal-02312065, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:142:y:2022:i:c:p:562-571. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.