Determinants of Staff Localization in Headquarters-Subsidiary-Subsidiary Relationships

Chan Bok Kim, Seong-Jin Choi and Luyao Zhang
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Chan Bok Kim: School of Business, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea
Seong-Jin Choi: School of Business, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea
Luyao Zhang: School of Business, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea

Sustainability, 2021, vol. 14, issue 1, 1-16

Abstract: This paper investigates how cultural distance, the local experience of a foreign subsidiary, and the intensity of local competition jointly affect the staff localization of MNEs’ subsidiaries. While previous studies on the effects of cultural distance have mainly focused on the gap between home and host countries, we extend the existing “home-host” country perspective to the home-intermediary-host country relationship. This study regards Korea as an intermediary country and utilizes 520 observations from a unique survey conducted by the Export-Import Bank of Korea from 2006 to 2013. The results suggest that the impact of cultural distance on staff localization is a function of local experience and competitive environment in the home-intermediate-host relationship structure. This paper makes a theoretical contribution to our understanding of the behavior of multinational corporations by expanding the cultural distance perspective between the home and host countries explored in previous research to the home-subsidiary-subsidiary structure.

Keywords: multinational enterprises (MNEs); staff localization; cultural distance; local experience; competition intensity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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