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Determinants of foreign subsidiary staffing by service firms

Author

Listed:
  • Naoki Ando
  • Nobuaki Endo

Abstract

Purpose - The purpose of this paper is to examine how service firms determine foreign subsidiary staffing, emphasizing the joint effect of an attribute specific to the service sector and the institutional environment of the host countries. Design/methodology/approach - This study develops hypotheses regarding the joint effect of human capital intensity and institutional distance on the ratio of parent country nationals to foreign subsidiary employees. A Tobit regression is conducted to test the hypotheses, using a sample that consists of 1,067 foreign subsidiaries of Japanese service firms. Findings - This study finds that the human capital intensity of a service firm has a positive impact on the ratio of parent country nationals to foreign subsidiary employees. The study also finds that the institutional distance between the host country and the home country is negatively associated with the ratio of parent country nationals. In addition, this study finds that the positive impact of human capital intensity on the ratio of parent country nationals becomes weaker as the institutional distance becomes greater. Originality/value - This study explores the factors that affect the decisions regarding foreign subsidiary staffing in the service sector. It advances the understanding of the foreign subsidiary staffing of service firms by examining the joint effect of an attribute specific to the service sector and the institutional environment of the host countries. This study shows evidence that the effect of an attribute specific to the service sector is more complex than a linear relationship.

Suggested Citation

  • Naoki Ando & Nobuaki Endo, 2013. "Determinants of foreign subsidiary staffing by service firms," Management Research Review, Emerald Group Publishing Limited, vol. 36(6), pages 548-561, May.
    • Handle: RePEc:eme:mrrpps:v:36:y:2013:i:6:p:548-561
    DOI: 10.1108/01409171311325723
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    Citations

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    Cited by:

    1. Moreira, Márcia Zabdiele & Ogasavara, Mário Henrique, 2018. "Formal and informal institutions and the expatriation assignment: The case of Japanese subsidiaries in Latin America," Japan and the World Economy, Elsevier, vol. 47(C), pages 18-26.
    2. Ziyi Wei & Quyen T. K. Nguyen, 2020. "Chinese Service Multinationals: The Degree of Internationalization and Performance," Management International Review, Springer, vol. 60(6), pages 869-908, December.
    3. Fabio Cassio-de-Souza & Mario Henrique Ogasavara, 2018. "The Impact of Cross-National Distance on Survival of Foreign Subsidiaries," Brazilian Business Review, Fucape Business School, vol. 15(3), pages 284-301, May.
    4. Tina Golob Šušteršič & Katja Zajc Kejžar, 2020. "The role of skilled migrant workers in FDI-related technology transfer," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(1), pages 103-132, February.

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