Trojan Horses or Local Allies: Host-country National Managers in Developing Market Subsidiaries

Jakob Müllner, Patricia Klopf, Phillip C. Nell

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    Abstrakt

    We investigate a multinational corporation's (MNC) decision to appoint host-country national (HCN) managers to foreign subsidiaries based on the institutional context of and familiarity with the host country. HCN managers are commonly associated with specialized knowledge, superior responsiveness, and higher legitimacy. Yet, we argue that local familiarity of HCNs can also be perceived as risky or harmful by MNC parents. We analyze how formal and informal institutions affect the trade-off between positive effects and potential costs associated with HCN managers (“Local allies” vs. “Trojan horses”). We find that legal institutions protect foreign MNCs from potential costs, encourage the use of HCNs and reinforce their benefits. Corruption and corruption distance, however, increase perceived costs associated with HCN managers up to a point at which they outweigh their perceived benefits.
    OriginalsprogEngelsk
    TidsskriftJournal of International Management
    Vol/bind23
    Udgave nummer3
    Sider (fra-til)306-325
    Antal sider20
    ISSN1075-4253
    DOI
    StatusUdgivet - sep. 2017

    Bibliografisk note

    Published online: 14. January 2017

    Emneord

    • Multinational corporations
    • Subsidiary staffing
    • Institutional theory
    • Corruption
    • Institutional distance

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