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Institutional distance, host country and international business experience, and the use of parent country nationals
Author(s) -
Ando Naoki,
Paik Yongsun
Publication year - 2013
Publication title -
human resource management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.44
H-Index - 77
eISSN - 1748-8583
pISSN - 0954-5395
DOI - 10.1111/j.1748-8583.2012.00201.x
Subject(s) - subsidiary , staffing , business , foreign national , sample (material) , international business , multinational corporation , demographic economics , economics , political science , law , management , finance , chemistry , chromatography
This study examines how the institutional distance between a host country and a home country influences foreign subsidiary staffing, and how overseas business experience moderates the effect of institutional distance. Hypotheses regarding the effect of institutional distance on foreign subsidiary staffing are empirically tested using a sample of 2,980 foreign subsidiaries of Japanese firms. This study shows that although the ratio of parent country nationals to subsidiary employees decreases when firms face greater institutional distance, the absolute number of parent country nationals assigned to the subsidiary increases. This study also shows that firms with more overseas business experience replace host country nationals with parent country nationals when there is greater institutional distance.