Productivity gap and expatriate utilization
ISSN: 1525-383X
Article publication date: 9 June 2022
Issue publication date: 12 June 2023
Abstract
Purpose
This paper aims to investigate how the gap between a multinational enterprise’s (MNE) productivity and that of its competitor determines the utilization of expatriate managers in its foreign subsidiaries.
Design/methodology/approach
The authors first develop a formal analytical model where expatriate managers are relatively more reliable and expensive while local managers are prone to job-hopping. The authors then test the predictions of the analytical model using subsidiary-level data of Korean MNEs.
Findings
The findings show a positive relationship between the productivity gap and the share of expatriate managers in a foreign subsidiary. The empirical findings also show that the job position (middle versus top managers) is another key determinant of the utilization of expatriate managers.
Originality/value
The results of this paper are consistent with the literature that finds that MNEs choose a governance structure that minimizes the hazard of opportunism in their subsidiaries, yet the paper reveals a novel aspect of the determinants of expatriate utilization.
Keywords
Citation
Lee, S., Whang, U., Nahm, S. and Oh, C.H. (2023), "Productivity gap and expatriate utilization", Multinational Business Review, Vol. 31 No. 2, pp. 266-289. https://doi.org/10.1108/MBR-04-2022-0051
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited