How Prior Entrepreneurial Experience of MNC Subsidiary Management Affects Performance

The importance of resource combination and reconfiguration for subsidiary success has been emphasized in prior international business literature. However, an understanding of how multinational corporations (MNCs) can build capabilities to perform these ressource transformations effectively over time at the subsidiary-level has remained largely underdeveloped. To address this shortcoming, we integrate insights from dynamic capability theory into models from MNC subsidiary management and propose that subsidiaries can develop dynamic capabilities by hiring managers with entrepreneurial experience. We argue that human capital acquired through entrepreneurial experience can be valuable outside of the organizational context of start-ups and hypothesize that MNC subsidiaries with managers that possess entrepreneurial experience will have higher performance. We test and support this hypothesis using longitudinal employer-employee data for 50,866 MNC subsidiaries in
Portugal.