Nationality background of MNC affiliates' top management and affiliate performance in Japan: knowledge-based and upper echelons perspectives

Abstract

Drawing from the knowledge-based view of multinational corporations (MNCs) and the upper echelons perspective along with the theory of job demands, we examine the relationship between nationality background of MNC affiliates' top management (i.e. expatriates or host country nationals) and affiliate performance. Using a sample of 643 foreign MNC affiliates from 31 countries operating in Japan, we found that when the length of an affiliate operation was shorter, the affiliate performed better under the expatriate managing director rather than the Japanese managing director. We also found that when the size of an affiliate was larger and the length of operation was shorter, the affiliate performed better under the larger rather than smaller proportion of expatriates in the top management team. Implications for research and practice on top management staffing of MNC foreign affiliates are discussed.

Keywords:

• expatriates
• MNC affiliates
• performance
• top management staffing

Acknowledgements

This work was supported by a Grant-in-Aid for Scientific Research (No. 20373110) from the Ministry of Education, Culture, Sports, Science and Technology. An earlier version of this paper was presented at the 2009 Meeting of the Academy of Management in Chicago, USA.

Notes

1. In creating dummy variables, industries and countries with a small number of MNC affiliates were categorized as ‘others.’