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General Manager Staffing and Performance in Transitional Economy Subsidiaries

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  • Andreas Schotter
  • Paul W. Beamish

Abstract

Drawing from institutional theory, we address the issues that headquarters of multinational corporations (MNCs) face when selecting local versus expatriate subsidiary general managers (GMs). Our analysis of 2,315 MNC subsidiaries in China shows that foreign direct investment (FDI) legitimacy is a reliable measure of institutional environment differences at the subnational level and that the commonly used country-level measures, including institutional distance and cultural distance, mask pertinent withincountry differences. MNCs that invest in Chinese provinces with lower FDI legitimacy use more local nationals as subsidiary GMs, compared to MNCs that invest in provinces with higher FDI legitimacy. In provinces with low FDI legitimacy, subsidiaries with local GMs perform relatively better than subsidiaries with expatriate GMs. This effect is particularly strong for wholly owned subsidiaries, as compared with joint ventures, and applies to all provinces except the most developed coastal regions. In provinces with higher levels of FDI legitimacy, these effects are reversed.

Suggested Citation

  • Andreas Schotter & Paul W. Beamish, 2011. "General Manager Staffing and Performance in Transitional Economy Subsidiaries," International Studies of Management & Organization, Taylor & Francis Journals, vol. 41(2), pages 55-87, January.
    • Handle: RePEc:taf:mimoxx:v:41:y:2011:i:2:p:55-87
    DOI: 10.2753/IMO0020-8825410203
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    Cited by:

    1. Onjewu, Adah-Kole Emmanuel & Walton, Nigel & Koliousis, Ioannis, 2023. "Blockchain agency theory," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    2. Luyun Xu & Jian Li & Xin Zhou, 2019. "Exploring new knowledge through research collaboration: the moderation of the global and local cohesion of knowledge networks," The Journal of Technology Transfer, Springer, vol. 44(3), pages 822-849, June.
    3. Maggie Chuoyan Dong & Yulin Fang & Detmar W. Straub, 2017. "The Impact of Institutional Distance on the Joint Performance of Collaborating Firms: The Role of Adaptive Interorganizational Systems," Information Systems Research, INFORMS, vol. 28(2), pages 309-331, June.
    4. Maximilian Stallkamp & Brian C Pinkham & Andreas P J Schotter & Olha Buchel, 2018. "Core or periphery? The effects of country-of-origin agglomerations on the within-country expansion of MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(8), pages 942-966, October.
    5. Schotter, Andreas P.J. & Buchel, Olha & Vashchilko (Lukoianova), Tatiana, 2018. "Interactive visualization for research contextualization in international business," Journal of World Business, Elsevier, vol. 53(3), pages 356-372.
    6. 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.
    7. Mary Teagarden & Andreas Schotter, 2013. "Favor prevalence in emerging markets: A multi-level analysis," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 447-460, June.
    8. Lin Cui & Yi Li & Klaus E. Meyer & Zijie Li, 2015. "Leadership Experience Meets Ownership Structure: Returnee Managers and Internationalization of Emerging Economy Firms," Management International Review, Springer, vol. 55(3), pages 355-387, June.
    9. Dan V. Caprar & Sunghoon Kim & Benjamin W. Walker & Paula Caligiuri, 2022. "Beyond “Doing as the Romans Do”: A review of research on countercultural business practices," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(7), pages 1449-1483, September.
    10. Li, Liang (Arthur) & Schotter, Andreas P.J. & Beamish, Paul W., 2024. "The origin and nationality of general manager successors in local-market-seeking MNE subsidiaries," International Business Review, Elsevier, vol. 33(3).

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