How localizing management affects subsidiary performance: evidence from South Korean multinational enterprises

This thesis investigates the crucial role of localizing management, deployment of short-term expatriates, subsidiary digitalization and subsidiary CEO experience in enhancing subsidiary performance within Multinational Enterprises (MNEs). It comprises three interrelated studies that provide a holistic view of the strategies that MNEs can adopt to optimize their operations in foreign markets. The first paper explores the implications of localizing management on subsidiary performance by considering local staffing and delegation of autonomy concurrently. Drawing on data from 117 subsidiaries of 20 South Korean MNEs, it reveals that local staffing and autonomy delegation complement each other, enhancing subsidiary performance when applied in tandem. Building upon this finding, the second study further investigates the impact of sub-components of localizing management (i.e., local staffing and autonomy delegation) within the evolving global context marked by rapid political, social, economic, and technological changes. Empirical analysis shows that the deployment of short-term expatriates can offset the positive effects of autonomy delegation on subsidiary performance. However, the paper also demonstrates that digitalization can mitigate these drawbacks, underscoring its importance in improving subsidiary performance. Lastly, the third study proposes a novel approach to select and develop subsidiary CEOs by focusing on their experience. Through a comprehensive literature review and empirical analysis, it highlights the significance of continuity and interaction in CEO experience, complementing the traditional emphasis on accumulated time. The study proposes an innovative model to conceptualize CEO experience with nationality, international experience and functional background, revealing the most effective CEO experience profiles that contribute to high subsidiary performance. Collectively, these papers enhance our understanding of the strategic significance of localizing management and CEO experience in MNEs, offering both theoretical insights and practical guidance for MNEs aiming to improve subsidiary performance. This thesis contributes to the broader field of international business by addressing the complexities of localizing management and identifying the dimensions of CEO experience that can enhance subsidiary performance in a rapidly evolving global landscape