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Managing institutional distance: Examining how firm-specific advantages impact foreign subsidiary CEO staffing

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  • Rickley, Marketa
  • Karim, Samina

Abstract

Based on the insight that superior access to knowledge can help foreign firms overcome liabilities of foreignness, we examine whether possession of firm-specific advantages shifts foreign firms’ CEO staffing strategies from local managers, who provide host-market insight, toward expatriates, who possess knowledge transfer and coordination capabilities. We find that, as institutional distance increases, firm-specific advantages from multinationality, regional agglomeration, and host-country experience substitute for the host-market insight of local CEOs. Foreign firms with such advantages instead staff the CEO role with expatriates. Our results are practically relevant to MNCs seeking to allocate a limited talent pool across different institutional contexts.

Suggested Citation

  • Rickley, Marketa & Karim, Samina, 2018. "Managing institutional distance: Examining how firm-specific advantages impact foreign subsidiary CEO staffing," Journal of World Business, Elsevier, vol. 53(5), pages 740-751.
    • Handle: RePEc:eee:worbus:v:53:y:2018:i:5:p:740-751
    DOI: 10.1016/j.jwb.2018.05.002
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