Institutional Environments, Staffing Strategies, and Subsidiary Performance

Abstract

The authors adopt and develop an institutional perspective to advance understanding of how host country environments influence subsidiary staffing strategies. They propose and find that (a) firms rely more on expatriates in institutionally distant environments for reasons related to the efficient transfer of management practices and firm-specific capabilities and (b) the positive influence of expatriate staffing levels on subsidiary performance is dependent on the institutional distance between the host and home country, and subsidiary experience. The authors' findings are based on their analysis of expatriate employment levels and performance in 12,997 foreign subsidiaries of 2,952 Japanese firms in 48 countries.