Melting pot or tribe? Country-level ethnic diversity and its effect on subsidiaries
Jennifer Oetzel () and
Chang Hoon Oh ()
Additional contact information
Jennifer Oetzel: American University
Chang Hoon Oh: Simon Fraser University
Journal of International Business Policy, 2019, vol. 2, issue 1, 37-61
Abstract The purpose of our study is to explore the effect of country-level ethnic diversity on subsidiary-level ownership strategy and employee productivity. We examine two characteristics of ethnic diversity in society, the level of diversity and degree of inclusion. Using a multi-source and multi-year (2004–2010) sample of 30,007 subsidiaries from 79 home-countries operating in 63 host-countries, we find that high levels of diversity are not a de facto form of country risk as some have argued. Rather, it is the ability of a dominant ethnic group to exclude others from full economic and political participation. As societies become more fragmented, and one or few groups become more dominant and prevents other groups from fully participating in the political process or economic opportunities, this may increase business risk and lower labor productivity. The broader policy implications are that policymakers should have engagement policies toward disfranchised ethnic groups. Policymakers should develop polices aimed at leveraging the benefits of diversity. MNCs have an interest in promoting such policies and fostering greater economic and political inclusion in countries where they operate.
Keywords: ethnic diversity; subsidiary ownership; subsidiary performance; employee productivity; investment risk (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1057/s42214-018-00016-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pal:joibpo:v:2:y:2019:i:1:d:10.1057_s42214-018-00016-3
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of International Business Policy is currently edited by Sarianna Lundan, Ari Van Assche and Anne Hoekman
More articles in Journal of International Business Policy from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla ().