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Dynamic capabilities for hire – How former host-country entrepreneurs as MNC subsidiary managers affect performance

Author

Listed:
  • Andreas P. Distel

    (Erasmus University
    Ludwig Boltzmann Gesellschaft)

  • Wolfgang Sofka

    (Copenhagen Business School
    University of Liverpool)

  • Pedro de Faria

    (University of Groningen)

  • Miguel Torres Preto

    (Universidade de Lisboa)

  • António Sérgio Ribeiro

    (Universidade de Lisboa)

Abstract

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments.

Suggested Citation

  • Andreas P. Distel & Wolfgang Sofka & Pedro de Faria & Miguel Torres Preto & António Sérgio Ribeiro, 2022. "Dynamic capabilities for hire – How former host-country entrepreneurs as MNC subsidiary managers affect performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 657-688, June.
    • Handle: RePEc:pal:jintbs:v:53:y:2022:i:4:d:10.1057_s41267-019-00274-0
    DOI: 10.1057/s41267-019-00274-0
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