Subsidiary staffing and performance: the case of foreign multinationals in the U.S.

International staffing is an important mechanism for the control and coordination of culturally and geographically dispersed operations of a multinational corporation. However literature on subsidiary staffing patterns and the search for the antecedents of subsidiary staffing has led to mixed results in the past. Moreover, the relation between subsidiary staffing and subsidiary performance has received very limited attention from researchers. Thus, this thesis is aimed at improving our understanding of the antecedents and outcomes of subsidiary staffing by addressing two research questions. My first research question relates to the antecedents of subsidiary staffing. I explore the influence of cultural distance between home and host countries, uncertainty avoidance dimension of the home country's national culture, and dependence of the subsidiary on the headquarters on subsidiary staffing patterns. My second research question relates to whether there is a relation between how a subsidiary is staffed and how it performs. Within this question, I explore whether multinational corporations face a paradox when staffing culturally distant subsidiaries. Although the literature suggests that cultural distance leads to ethnocentric staffing patterns, I argue that this decision will lower subsidiary performance since cultural distance will also diminish the ability of parent country nationals to operate successfully in such an environment. I test my model on a random sample of 52 foreign multinationals operating in the U.S. Although U.S. is the top recipient of foreign direct investment in the world, this population has not been studied in published international staffing studies, and thus is a valuable contribution to the emerging literature on this topic. The results provide support for both of the research questions. All the three antecedents are significant predictors of the ratio of parent country nationals in the workforce. For the second research question, although there is no direct relation between subsidiary staffing and performance, this relation depends on the cultural distance between the U.S. and the home country. Ethnocentric staffing diminishes subsidiary performance significantly when cultural distance is high.M.S.Includes bibliographical references (p. 56-64)