Resource Orchestration and Subsidiary Performance: How Does Entrepreneurial Human Capital Matter?

The importance of resource combination and reconfiguration for subsidiary success within multinational corporations (MNCs) is central to international business literature. However, an understanding of how MNC subsidiaries can build capabilities to perform these resource transformations effectively remains largely underdeveloped. To address this shortcoming, we integrate insights about entrepreneurial managers 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 reason that human capital acquired through prior entrepreneurial experience enables subsidiary managers to increase subsidiary performance. We test and support this hypothesis using longitudinal employer-employee data for 6,738 MNC subsidiaries in Portugal. We also find that the positive effect is stronger if subsidiaries are connected to headquarters through expatriate managers and operate in dynamic host country environments