TY - JOUR
T1 - MNC Subsidiary Closures
T2 - What is the Value of Employees' Human Capital in New Jobs?
AU - Sofka, Wolfgang
AU - Torres Preto, Miguel
AU - de Faria, Pedro
PY - 2014
Y1 - 2014
N2 - We investigate the consequences of MNC subsidiary closures for employees who lose their jobs. In particular, we examine the extent to which the human capital that these employees acquired while employed by the MNC influences the wages they receive in their new jobs. We propose an employee displacement model for foreign MNC subsidiaries that integrates insights from the labor economics and international business literatures. We argue that a new employer will pay higher wages when signals indicate that potential employees have valuable, foreign human capital (e.g., the closed subsidiary was highly productive by host-country standards), and lower wages when signals indicate that potential employees have highly MNC-specific human capital (e.g., the employee had a long tenure in the closed subsidiary). We provide empirical evidence based on a sample of 110,133 displaced employees of closed MNC subsidiaries in Portugal. Our data set spans the period from 2005 to 2009. Showing that MNCs create a valuable pool of human capital for host-country firms when they close subsidiaries, our findings have important implications for research and practice
AB - We investigate the consequences of MNC subsidiary closures for employees who lose their jobs. In particular, we examine the extent to which the human capital that these employees acquired while employed by the MNC influences the wages they receive in their new jobs. We propose an employee displacement model for foreign MNC subsidiaries that integrates insights from the labor economics and international business literatures. We argue that a new employer will pay higher wages when signals indicate that potential employees have valuable, foreign human capital (e.g., the closed subsidiary was highly productive by host-country standards), and lower wages when signals indicate that potential employees have highly MNC-specific human capital (e.g., the employee had a long tenure in the closed subsidiary). We provide empirical evidence based on a sample of 110,133 displaced employees of closed MNC subsidiaries in Portugal. Our data set spans the period from 2005 to 2009. Showing that MNCs create a valuable pool of human capital for host-country firms when they close subsidiaries, our findings have important implications for research and practice
KW - Closure of MNC subsidiaries
KW - Displacement
KW - Human capital
KW - Labor economics
U2 - 10.1057/jibs.2014.17
DO - 10.1057/jibs.2014.17
M3 - Journal article
SN - 0047-2506
VL - 45
SP - 723
EP - 750
JO - Journal of International Business Studies
JF - Journal of International Business Studies
IS - 6
ER -