Abstract

When foreign MNC subsidiaries commercialize their products and services on foreign markets, they oftentimes rely on new marketing approaches such as a new pricing model adapted to local customers and competitors. Since MNC subsidiaries typically suffer from “liabilities of foreignness”, they depend on skilled marketing professionals who possess a deep understanding of host country markets to implement these marketing innovations. However, the value that these individuals can create for MNC subsidiaries vis-à-vis domestic firms and under which host country market conditions their B2B marketing skills are most valuable is poorly understood. We integrate mechanisms from research on value creation through marketing innovation in MNC subsidiaries into strategic human capital theory and predict higher value creation to translate into salary premiums for these individuals compared to when they would work for domestic firms. Moreover, we argue that these salary premium effects depend on the innovativeness of the host country competition which challenges MNC subsidiaries and makes marketing innovation even more salient. We test and support our hypotheses using employer-employee data for 25,374 marketing professionals from 2010 to 2012 in Denmark. The findings have broad relevance for the management of strategic human capital management in the creation of marketing innovation.

Introduction

Marketing capabilities are foundational for the international success of industrial firms since they enable them to find, attract and maintain customers outside of their home countries (Samiee, Katsikeas, & Hult, 2021). A central pillar of such marketing capabilities are skilled marketing professionals who can design, deploy and refine successful marketing strategies (Moorman & Day, 2016). Particularly in foreign subsidiaries of Multinational Corporations (MNCs) that seek to commercialize their products and services abroad, marketing professionals help to accumulate specific knowledge about host country markets and to build professional networks with industrial firms through which they can channel this knowledge to decision makers at MNC headquarters. As these products and services constitute new offerings on host country markets with different degrees of novelty vis-à-vis domestic competitor offerings, marketing professionals help to build three essential B2B marketing capabilities (Mora Cortez & Hidalgo, 2022): market segmentation and targeting (e.g., Ulaga & Chacour, 2001), adaptation of the marketing mix, for example by implementing a new pricing model that fits with host country customs (e.g., Grimpe, Sofka, Bhargava, & Chatterjee, 2017), as well as development and selection of new products to be marketed abroad (e.g., Cooper & Kleinschmidt, 1987).

Conclusion

The scope of the research presented here is broader than what fits into a single study, suggesting promising avenues for new research projects. These opportunities occur in several areas.

First, we establish that marketing professionals create value, particularly for foreign subsidiaries, and that this value translates into salary premiums. While our focus on marketing professionals is useful to build a theoretical rationale that connects the human capital that these individuals hold with the resources and specific requirements of foreign subsidiaries versus domestic firms, it conceals the heterogeneity in marketing professionals’ tasks and competences. Specifically, some subsidiaries may be particularly reliant on the individuals’ skills and expertise in local customer interaction while others are especially challenged to coordinate the local marketing approach with the global headquarters. We believe that dedicated research could better uncover many of the processes that underpin various forms of value creation.

Second, our empirical analysis predicts higher salaries as a reflection of higher value that marketing professionals can create when they work for the subsidiary of a foreign MNC subsidiary vis-à-vis a domestic firms. We are however limited in the extent we can actually observe the processes leading to value being created. Future research could look in more detail into these processes which create value for firms, particularly when individuals are newly hired. Relevant aspects would include mechanisms at the level of the organization related to the flow of knowledge or the composition of teams but also the career trajectories of individuals when it comes to promotion or retention.

Third, our analysis relies on a matching approach for isolating the salary effects of working for a foreign subsidiary vis-à-vis a domestic firm. While the matching approach accounts for the selection of employees into MNC subsidiary employment, it would be interesting to better understand, which factors lead marketing professionals to consider an MNC employer in the first place and what role the host country industry contingencies play for the decision of individuals to work for the subsidiary of a foreign MNC or a domestic firm.