The Impact of Subsidiary Top Management Team National Diversity on Subsidiary Performance: Knowledge and Legitimacy Perspectives

HKUST Business School Research Paper No. 07-24

Management International Review, Vol. 46, pp. 771-789, June 2006

20 Pages Posted: 1 Aug 2007

See all articles by Yaping Gong

Yaping Gong

Hong Kong University of Science & Technology (HKUST)

Abstract

This study examines the impact of nationality composition within subsidiary top management teams (STMTs) on subsidiary performance. It first gives a review of the multinational team literature. It concludes that nationality diversity is beneficial when it is relevant to a multinational team's task. The study then draws upon two complementary theoretical perspectives: knowledge and legitimacy. It proposes that a heterogeneous STMT nationality composition may enhance subsidiary performance with the effect being stronger in subsidiaries of longer years of operation. Hypotheses were tested in a sample of STMTs from Japanese Multinational Corporations. The study finds that STMT nationality heterogeneity was positively related to subsidiary labor productivity. An interaction effect was also found. As the number of years a subsidiary had been in operation increased, so did the effect of STMT nationality heterogeneity on subsidiary performance.

Keywords: Subsidiary Top Management, Teams, Multinational Teams, Nationality

Suggested Citation

Gong, Yaping, The Impact of Subsidiary Top Management Team National Diversity on Subsidiary Performance: Knowledge and Legitimacy Perspectives. HKUST Business School Research Paper No. 07-24; Management International Review, Vol. 46, pp. 771-789, June 2006. Available at SSRN: https://ssrn.com/abstract=1004257

Yaping Gong (Contact Author)

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

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