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Societal trust, formal institutions, and foreign subsidiary staffing

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Abstract

This study examines the interactive effects of host-country societal trust and formal institutions on foreign subsidiary staffing strategies. Based on the conceptualization of institutions in new institutional economics, we demonstrate that high societal trust and strong formal institutions that support market-based exchange jointly reduce the incidence of expatriate staffing in foreign subsidiaries. We identify two contingency factors – subsidiary interdependence and host-country experience – that affect this relationship. Our finding suggests that the level of interdependence among subsidiaries within the MNE network and the host-country experience of the subsidiaries negatively moderate the interactive effect of formal and informal institutions on expatriate staffing. We test our hypotheses based on longitudinal data of 6675 foreign subsidiaries of 435 Korean MNEs in 42 countries between 1990 and 2014.

Résumé

Cette recherche examine les impacts interactifs de la confiance au sein de la société et des institutions formelles du pays d’accueil sur les stratégies de dotation en personnel liées aux filiales étrangères. Nous appuyant sur la conceptualisation des institutions dans la perspective de la nouvelle économie institutionnelle, nous démontrons qu'une confiance sociétale élevée et les institutions formelles fortes qui soutiennent les échanges basés sur le marché réduisent conjointement l’ampleur du recours aux expatriés dans les filiales étrangères. Nous identifions deux facteurs de contingence – l'interdépendance entre les filiales et l'expérience dans le pays d'accueil – lesquels influent sur cette relation. Nos résultats suggèrent que le niveau d'interdépendance entre les filiales au sein du réseau d’une entreprise multinationale et l'expérience des filiales dans le pays d'accueil modèrent négativement l'impact interactif des institutions formelles et informelles sur l’effectif des expatriés. Nous testons nos hypothèses sur une base de données longitudinales de 6675 filiales étrangères de 435 multinationales coréennes dans 42 pays pour la période 1990–2014.

Resumen

Este estudio examina los efectos interactivos de la confianza en la sociedad del país anfitrión y las instituciones formales sobre las estrategias de contratación de personal de las filiales extranjeras. Con base en la conceptualización de la nueva economía institucional, demostramos que una alta confianza social e instituciones formales fuertes que apoyan el intercambio basado en el mercado conjuntamente reducen la incidencia de la contratación personal expatriado en las filiales extranjeras. Identificamos dos factores de contingencia -la interdependencia de las filiales y la experiencia del país anfitrión- que afectan esta relación. Nuestros hallazgos sugieren que el nivel de interdependencia y la experiencia entre las filiales dentro de la red de la empresa multinacional y la experiencia del país anfitrión en las filiales modera negativamente el efecto interactivo de las instituciones formales e informales en la contratación de personal expatriado. Probamos nuestras hipótesis basándonos en datos longitudinales de 6.675 filiales extranjeras de 435 multinacionales coreanas en 42 países entre 1990 y 2014.

Resumo

Este estudo examina os efeitos interativos da confiança social do país anfitrião e instituições formais nas estratégias de alocação de funcionários em subsidiárias estrangeiras. Com base na conceituação de instituições na nova economia institucional, demonstramos que alta confiança da sociedade e fortes instituições formais que apoiam mudanças baseadas no mercado reduzem, em conjunto, a incidência de alocação de expatriados em subsidiárias estrangeiras. Identificamos dois fatores de contingência - interdependência da subsidiária e experiência do país anfitrião - que afetam essa relação. Nossas descobertas sugerem que o nível de interdependência entre subsidiárias dentro da rede da MNE e a experiência do país anfitrião das subsidiárias moderam negativamente o efeito interativo de instituições formais e informais sobre a alocação de expatriados. Testamos nossas hipóteses com base em dados longitudinais de 6.675 subsidiárias estrangeiras de 435 MNEs coreanas em 42 países entre 1990 e 2014.

摘要

本研究考察了东道国社会信任和正规制度对外国子公司人员配备战略的互动影响。基于新制度经济学中制度的概念化, 我们证明了高度的社会信任和支持市场交换的强大正式制度共同降低了外国子公司外派人员的发生率。我们确定了影响这种关系的两个偶然因素——子公司的相互依赖和东道国的经验。我们的研究结果表明, 跨国企业(MNE) 网络内子公司之间的相互依赖程度和子公司的东道国经验消极地缓和了正式和非正式制度对外派人员配备的互动影响。我们根据 1990 至 2014 年间 42 个国家的 435 家韩国跨国公司的 6,675 家外国子公司的纵向数据检验了我们的假设。

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Authors and Affiliations

  1. Department of Management and Global Business, Rutgers Business School - Newark and New Brunswick, 1 Washington Park, Newark, NJ, 07102, USA

    Ajai Gaur

  2. Discipline of International Business, University of Sydney Business School, Sydney, Australia

    Chinmay Pattnaik

  3. School of Business, Rutgers University – Camden, 227 Penn Street, Camden, NJ, 08102-1656, USA

    Deeksha Singh

  4. School of Business Management, Hongik University, Sejong, 30016, South Korea

    Jeoung Yul Lee

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  1. Ajai Gaur
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  2. Chinmay Pattnaik
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  4. Jeoung Yul Lee
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Accepted by Luis Dau, Guest Editor, 7 November 2021. This article has been with the authors for five revisions.

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Gaur, A., Pattnaik, C., Singh, D. et al. Societal trust, formal institutions, and foreign subsidiary staffing. J Int Bus Stud 53, 1045–1061 (2022). https://doi.org/10.1057/s41267-021-00498-z

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