Environmental Multi‐dimensionality and Staff Localization in Multinational Enterprises: The Case of Korean Firms

Abstract

The person-environment fit theory posits that the term "environment" can be defined at different levels. This study delineates two environmental dimensions (strategic and organizational) and empirically examines the potential moderating effects of two strategic factors (intra-and interregional diversification) on the relationship between two organizational factors (subsidiary ownership and host-country experience) and MNE subsidiary staffing composition. The results indicate that strategic and organizational dimensions have impacts on subsidiary staffing composition. This study also finds that the interaction effects between strategic and organizational factors are significant only when there is congruence between demands from different environmental dimensions.

Determinants of Staff Localization in Headquarters-Subsidiary-Subsidiary Relationships

“…Facing the dual pressures of globalization and local response, multinational companies may choose a competitive strategy, such as a global strategy or multi-domestic strategy, and then select staffing practices for their subsidiaries appropriate to the strategy [52]. An MNE often balances its strategic needs by responding to both global integration and local responsiveness.…”

“…Previous research has explored the importance of congruence between mitigating cultural conflicts in MNEs and staff localization strategies [52]. The unique Chinese social culture and internal labor market have been identified as the core factors determining Chinese human resource management practices [56].…”