Ralf Bebenroth (Research Institute for Economics and Business Administration, Kobe University) Donghao Li (Graduate School of Business Administration, Kobe University)
Abstract
Our empirical study provides the first insights of executive staffing practice patterns in foreign-owned multinational company (MNC) subsidiaries based in Japan. We explore determinants for parent country nationals (PCN) as top managing directors and - new in the International Human Resource Management (IHRM) literature - also the ratio of PCN found on the board (Ratio) and examine under which conditions they are prevalent in the subsidiaries. We sampled the full range of 3,241 foreign companies in Japan. For the PCN/Ratio, several of our hypotheses were relevant for the PCN and were tested to be positive. In regard to the ownership ratio of the subsidiaries, the PCN/Ratio is highly significant to 1%, supporting the theory that also for Japan high ownership matters when it comes to sending one's "own" people to the subsidiary abroad. In contrast to studies for other countries, however, the size of the subsidiary does not matter for Japan, at least when measured (like usually done) by the number of employees. Only if we measure size by capital does the PCN/Ratio prevalence become significant. The PCN/Ratio also becomes highly significant (by 1%) in countries with a high Power Distance and a high Uncertainty Avoidance. PCN sending behavior seems to be somehow a country-specific phenomenon. We, furthermore, show that it matters whether companies settle down in one of the two big centers in Japan (Kanto and Kansai), which cultural circumstances for PCN tend to be more similar than in other areas of Japan. In Kanto and Kansai there are statistically significant more PCN and, therefore, a higher PCN/Ratio than in other Japanese areas. In regard to MNCs, we show that smaller sized MNCs have a lower prevalence of PCN as their top managing director. These findings are in contrast to the International Human Resource Management literature. We put MNCs into two groups and show that MNCs with under 5000 employees have a lower prevalence of PCN as top managing directors (on average 28%). At the same time however, the PCN to the whole board (Ratio) is higher in these smaller MNCs (up to 10%). In other words, bigger companies seem to rely on their PCN as their top managing director in Japan. In contrast to this, in smaller companies, Japanese senior managers prevail as the top managing directors (HCN), although our research suggests that there are more PCN sent to the board of the bigger MNCs. Finally, we produce evidence that US subsidiaries in Japan have the lowest PCN/Ratio, with the PCN only counting for 22%, and the Ratio at 28%. In stark contrast, Asian countries have the highest PCN/Ratio in our sample, with Korea leading with PCN of 81% and a Ratio of 82%.
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Publisher Info
Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number
194.