۱- Introduction

۲- Theory and hypotheses

۳- Methodology

۴- Results

۵- Discussion

۶- Conclusion

References

Abstract

Little research examines the mechanisms for the relationship between expatriate utilization and subsidiary performance. Building on the knowledge-based view of the firm, we propose a multi-stage mediation model to explain how expatriate staffing promotes subsidiary financial performance. Our results underscore that expatriate utilization has an indirect, mediated effect on subsidiary financial performance through its links with subsidiaries’ knowledge creation and product performance. Adopting a moderated mediation approach, we also find that the indirect relationship between expatriate utilization and subsidiary product performance via subsidiary knowledge creation is strengthened by the context of transnational strategy as a moderating contingency.

Introduction

Access to distinctive knowledge assets transferred from a parent firm to its subsidiaries has traditionally been considered a key requirement to overcome liabilities of foreignness in foreign markets (Dunning, 1980; Kogut & Zander, 1993; Zaheer, 1995). A more recent view of MNCs has highlighted the importance of recognizing dispersed knowledge sources in an MNC, orchestrating knowledge flows from subsidiaries as well as headquarters (HQ) and leveraging such knowledge across an MNC network (Bartlett & Ghoshal, 1989; Ghoshal & Bartlett, 1988). According to this view, the ability of a subsidiary to create valuable and unique knowledge assets – not just to harness knowledge transferred from its parent firm – is a core part of the subsidiary-specific advantages that enable the subsidiary to perform effectively in the local market (Rugman & Verbeke, 2001). Thus, identifying the potential sequential processes through which a subsidiary creates valuable knowledge is increasingly important in enhancing the sustained competitive advantage of the entire MNC (Colakoglu, Yamao, & Lepak, 2014; Fang, Jiang, Makino, & Beamish, 2010). While the significance of understanding the knowledge creation capability of a subsidiary has been widely acknowledged in the MNC literature, relatively few empirical studies have been conducted in this line of enquiry (Andersson, Björkman, & Forsgren, 2005; Belderbos & Heijltjes, 2005; Colakoglu et al., 2014). First, with regard to antecedents to subsidiary knowledge creation, research has suggested that external knowledge flows to a subsidiary are a key factor enhancing the knowledge creation capability of the subsidiary, alongside other factors that facilitate the utilization of the sourced knowledge in the knowledge creation process (Almeida & Phene, 2004; Andersson et al., 2005; Colakoglu et al., 2014; Phene & Almeida, 2008). However, empirical studies did not fully support this view as they found that only external local knowledge inflows are conducive to subsidiary knowledge creation (e.g., Colakoglu et al., 2014; Phene & Almeida, 2008). It is unclear whether and how knowledge inflows from an MNC network contribute to subsidiary knowledge creation.