Trojan Horses or Local Allies: Local Board Members in Emerging Market Subsidiaries

Jakob Müllner, Patricia Klopf, Phillip Christopher Nell

    Research output: Contribution to conferencePaperResearchpeer-review

    Abstract

    We investigate an MNC’s 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. On the negative side, we argue that these characteristics of HCNs can potentially be used to the harm of a foreign MNC. We analyze how formal and informal institutions affect the trade-off between positive effects and the 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 benefits. Our results suggest that subsidiary staffing decisions are not only influenced by the benefits of HCNs. Potential costs of HCNs that manifest if appropriate institutions do not sufficiently protect foreign MNCs matter to an equal extent.
    Original languageEnglish
    Publication date2016
    Number of pages48
    Publication statusPublished - 2016
    EventThe Academy of Management Annual Meeting 2016: Making Organizations Meaningful - Anaheim, United States
    Duration: 5 Aug 20169 Aug 2016
    Conference number: 76
    http://aom.org/annualmeeting/

    Conference

    ConferenceThe Academy of Management Annual Meeting 2016
    Number76
    CountryUnited States
    CityAnaheim
    Period05/08/201609/08/2016
    Internet address

    Bibliographical note

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    Keywords

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

    Cite this

    Müllner, J., Klopf, P., & Nell, P. C. (2016). Trojan Horses or Local Allies: Local Board Members in Emerging Market Subsidiaries. Paper presented at The Academy of Management Annual Meeting 2016, Anaheim, United States.