Why a Multinational Firm Chooses Expatriates: Integrating Resource‐Based, Agency and Transaction Costs Perspectives*

Abstract

This paper develops an integrative organizational economics framework explaining and predicting multinational firms' managerial resource deployments based on resource-based, agency, and transaction costs theories. Our empirical findings suggest that the governance decision for managerial services of multinational firms is influenced not only by the comparative capabilities of managers, but also by the economic costs to the firm of influencing the behaviours of managers through managerial contracting.

Swimming against the tide: Outward staffing flows from multinational subsidiaries

“…While the study of global staffing has a long tradition (Collings, Scullion & Dowling et al, 2009;Harvey & Moeller, 2009), these studies have focused heavily on flows of parent country nationals (PCNs) from the headquarters (HQ) to subsidiary operations (Edstrom & Galbraith, 1977;Harzing, 2001;Scullion, 1994;Tan & Mahoney, 2006). This generally presented as an alternative to host country nationals (HCNs) in staffing subsidiary operations.…”

Expatriates, subsidiary autonomy and the overseas subsidiary performance of MNEs from an emerging economy

“…In addition, previous research on expatriation and subsidiary performance has overwhelmingly focused on the direct impact of expatriates on subsidiary performance through the lenses of transaction-cost economics (TCE) (Benito, et al, 2005;Colakoglu & Caligiuri, 2008;Tan & Mahoney, 2006) and institutional theory (Xu, Pan, & Beamish, 2004) without considering the role of subsidiary autonomy.…”

“…While the existing literature in this area has recognised the importance of expatriates for the subsidiary performance of MNEs, much research has focused on the performance benefits of expatriates from developed economy MNEs, such as the US, Europe and Japan, and has tended to assume that the knowledge to be transferred from headquarters to subsidiaries through expatriates positively affects subsidiary performance (Delios & Beamish, 2001;Gong, 2003b;Tan & Mahoney, 2006). However, in the past decade, outward foreign direct investment (FDI) from emerging economy MNEs (EEMNEs) has increased rapidly.…”

“…As one of the most important resources of MNEs, expatriates are expected to achieve a wide range of corporate objectives including facilitating firm-specific knowledge transfer (Jensen & Szulanski, 2004;Wang, Tong, & Koh, 2004), establishing international operations and opening new markets, as well as gaining international experience. These, in turn, help MNEs obtain competitive advantage and enhance their subsidiary performance (Delios & Beamish, 2001; Tan & Mahoney, 2006).…”

“…The term expatriates in this study refers to parent country nationals from multinational enterprise (MNE) parent companies assigned to their foreign subsidiaries (Tan & Mahoney, 2006). As one of the most important resources of MNEs, expatriates are expected to achieve a wide range of corporate objectives including facilitating firm-specific knowledge transfer (Jensen & Szulanski, 2004;Wang, Tong, & Koh, 2004), establishing international operations and opening new markets, as well as gaining international experience.…”