Expatriate or local? Predicting Japanese, subsidiary expatriate staffing strategies

Abstract

Can Dunning's OLI (Ownership, Location, Internalization) framework be extended from predicting FDI location decisions and entry mode choices to other international strategic decisions? Using data from 891 new (two years or younger) Japanese foreign subsidiaries, we investigate the relationship between Dunning's OLI variables and expatriate staffing ratios (the ratio of expatriates to local employees). We found empirical support for Dunning's framework as a predictor of Japanese new subsidiary expatriate staffing ratios. Implications and directions for future research are discussed.

Keywords:

• Dunning's OLI framework
• expatriate
• international
• Japanese multinational corporations
• staffing
• subsidiary staffing

Notes

1. Boyacigiller (1990) used the number of employees as her measure of firm size. This may be problematic. Using number of employees as both an independent variable and as the denominator of the dependent variable can cause methodological problems (Neeter et al. 1990). Moreover, Boyacigiller (1990) found size to have no impact on expatriate staffing ratios.

2. Conversely, Boyacigiller (1990) hypothesized and found cultural distance to be positively related to the use of expatriate managers in a US based bank. However her cultural single item distance measure actually measured ‘the difficulty of adjusting to and working in the different countries’ (p. 367). Thus, her single item measure and Hofstede's (1980) multi-item scale actually measure different things at different levels.