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Trojan Horses or Local Allies: Host-country National Managers in Developing Market Subsidiaries

Müllner, Jakob and Klopf, Patricia and Nell, Phillip C. (2017) Trojan Horses or Local Allies: Host-country National Managers in Developing Market Subsidiaries. Journal of International Management, 23 (3). pp. 306-325. ISSN 1075-4253

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Abstract

We investigate a multinational corporation's (MNC) decision to appoint host-country national (HCN) managers to foreign subsidiaries based on the institutional context of and familiarity with the host country. HCN managers are commonly associated with specialized knowledge, superior responsiveness, and higher legitimacy. Yet, we argue that local familiarity of HCNs can also be perceived as risky or harmful by MNC parents. We analyze how formal and informal institutions affect the trade-off between positive effects and potential costs associated with HCN managers ("Local allies" vs. "Trojan horses"). We find that legal institutions protect foreign MNCs from potential costs, encourage the use of HCNs and reinforce their benefits. Corruption and corruption distance, however, increase perceived costs associated with HCN managers up to a point at which they outweigh their perceived benefits.

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version requires a subscription. The original publication is available at http://www.elsevier.com.
Keywords: Multinational corporations; Subsidiary staffing; Institutional theory; Corruption; Institutional distance
Divisions: Departments > Welthandel > International Business > Nell
Version of the Document: Accepted for Publication
Depositing User: Gertraud Novotny
Date Deposited: 01 Dec 2017 12:36
Last Modified: 14 Jan 2019 08:15
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/80232/
URI: http://epub.wu.ac.at/id/eprint/5891

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