How does successive inpatriation contribute to subsidiary capability building and subsidiary evolution? An organizational knowledge creation perspective

Intra-company knowledge transfer is a key source of competitive advantage for multinational companies (MNCs) and this knowledge is usually embedded in individuals. Drawing on organizational knowledge creation theory, we explore how inpatriation contributes to knowledge transfer and, in turn, subsidiary performance. Inpatriation involves the international assignment of employees from an MNC’s foreign subsidiary to its headquarters. Despite increasing attention to the role of inpatriation, we lack a clear understanding of whether and how inpatriates provide value to their subsidiaries after returning from headquarters. Through a qualitative case study of Japanese MNCs, we demonstrate the process through which inpatriates’ knowledge transfer contributes to subsidiary capability building and subsidiary evolution over time, and explain why successive inpatriation is thus critical to enhance subsidiary performance. Our theoretical model highlights the value of inpatriates as knowledge agents, reveals the process through which inpatriates transfer knowledge between HQ and subsidiaries, and provides a more nuanced understanding of the micro-foundations of intra-MNC knowledge transfer processes. Based on these findings, we argue that inpatriation is not merely a staffing method that is complementary to expatriation, but a key practice in its own right to support subsidiaries’ growth and performance.

Chinese parent firm’s knowledge types and governance modes’ effect on overseas subsidiaries’ performance: a contingency perspective

Purpose Based on an ensemble sample of multinational enterprises (MNEs), this study aims to explore the effect of the interactions between Chinese parent firms’ knowledge (including both technological and marketing knowledge), equity control and cultural distance on the business performance of their overseas branches under different subsidiary roles. Design/methodology/approach The study uses a data set compiled from 138 listed Chinese manufacturing enterprises and their 231 overseas subsidiaries to test the hypotheses regarding the interactive effects of transferred knowledge types and the subsidiary’s control mode. Findings The empirical results suggest that the moderating effects of equity control and cultural distance vary with the types of the parent firm’s knowledge and subsidiary roles. Specifically, equity control positively regulates the relationship between technological knowledge and subsidiary performance while negatively moderating the relationship between marketing knowledge and subsidiary performance. Cultural distance appears to negatively regulate the relationship between marketing knowledge and subsidiary performance. This binary relationship is shown to be more significant for the implementer subsidiaries. Originality/value Drawing on the literature on inter-firm governance and knowledge-induced innovation mechanisms, the authors develop a theoretical contingency framework to derive some managerial implications for inter-firm and infra-firm knowledge transfer in light of MNEs’ performance integrity.

Performance of Chinese foreign subsidiaries: the role of national distance, organizational learning and overseas Chinese networks

PurposeThe current literature lacks discussion on the effects of synergy among multiple factors at different levels on foreign subsidiary performance. The purpose of this paper is to explore the configuration of factors affecting foreign subsidiary performance.Design/methodology/approachThe methodology adopted in this paper is the fuzzy-set qualitative comparative analysis (fsQCA). The data are obtained from 125 foreign subsidiaries of Chinese MNCs through questionnaire surveys and secondary data.FindingsThe research results reveal that five configurations of antecedent conditions predict high foreign subsidiary performance, and the other two configurations predict not-high performance.Research limitations/implicationsThis paper’s main limitation is its only focus on foreign subsidiaries of Chinese MNCs, which means that the findings should be generalized with precaution. The most valuable implication is to identify the configurations that lead to high and not-high foreign subsidiary performance.Practical implicationsThis paper addresses the question of how interdependent factors at the national and corporate level are beneficial to foreign subsidiaries’ performance.Originality/valueThis study makes the following contributions to current theories: It provides (1) new insights for understanding the complex causality between antecedent conditions and foreign subsidiary performance and (2) a practical reference for the multinational operations of foreign subsidiaries.

Human capital, cultural distance and staffing localization

Purpose This study aims to explore how a change in the staffing configuration of foreign subsidiaries affects subsidiary performance by focusing on staffing localization. Design/methodology/approach The relationship between localization and subsidiary performance is analyzed from the perspective of human capital. Hypotheses are tested using a panel data set of foreign direct investment by Japanese multinational enterprises. Findings The analysis demonstrates that localization has a positive effect on subsidiary performance when subsidiaries can access a pool of competent local managers in the host country. It also shows that when competent local managers are highly available, localization has a positive effect on subsidiary performance under high cultural distance. In comparison, when the availability of competent local managers is limited and cultural distance is high, localization has a negative effect on subsidiary performance. Originality/value Using human capital theory, this study theorizes how localization, which is a change in the configuration of human capital toward a reliance on local-specific human capital, enhances subsidiary-specific advantages. It introduces the effects of changes in the configuration of human capital over time, into studies on subsidiary staffing. In addition, from a different viewpoint than previous studies, this study proposes one possible path where human capital leads to organizational performance. Specifically, it shows that a change in the configuration of human capital affects subsidiary-specific advantages, which eventually impacts subsidiary performance.