Subsidiary staffing, cultural friction, and subsidiary performance

Evidence from Korean subsidiaries in 63 countries

Deeksha Singh, Chinmay Pattnaik, Jeoung Yul Lee, Ajai Gaur

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Drawing from the notion of cultural friction and based on the agency theory rationalization of multinational enterprise (MNE) headquarter–subsidiary relationship, we examine the impact of cultural friction in foreign subsidiaries on subsidiary performance. We argue that cultural friction, arising due to a high presence of parent country nationals (PCNs) in culturally distant locations, has a detrimental effect on subsidiary performance. This effect is the strongest when the cultural friction is at the top management team (TMT) level and the weakest when friction is at the regular employee level. However, this relationship is contingent on factors that work as drags or lubricants for cultural friction between PCNs and host country nationals (HCNs). We identify governance mode and language differences between home and host countries as drag parameters and host country experience and subsidiary interdependence as lubricants that condition the effect of cultural friction on subsidiary performance. Empirical findings based on a longitudinal sample of 7,495 foreign subsidiary observations of 467 Korean MNEs in 63 countries during 1990–2014 provide robust support for our theoretical predictions.

Original languageEnglish (US)
Pages (from-to)219-234
Number of pages16
JournalHuman Resource Management
Volume58
Issue number2
DOIs
StatePublished - Mar 1 2019

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Friction
Lubricants
Drag
Subsidiaries
Staffing
Subsidiary performance
Language
Personnel
Industry

All Science Journal Classification (ASJC) codes

  • Applied Psychology
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

Cite this

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Subsidiary staffing, cultural friction, and subsidiary performance : Evidence from Korean subsidiaries in 63 countries. / Singh, Deeksha; Pattnaik, Chinmay; Lee, Jeoung Yul; Gaur, Ajai.

In: Human Resource Management, Vol. 58, No. 2, 01.03.2019, p. 219-234.

Research output: Contribution to journalArticle

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