Managing Uncertainty: Executive Appointments in Foreign Subsidiary Environments

46 Pages Posted: 8 Nov 2014  

Marketa Sonkova

Boston University

Samina Karim

Northeastern University

Date Written: October 1, 2013

Abstract

This study examines how MNCs use strategic human capital appointments in the subsidiary executive team to manage tension between effective monitoring and local knowledge utilization when faced with subsidiary environment uncertainty. Using a sample of executives from 75 subsidiaries of 34 U.S. and European banks over 5 years, we find that MNCs appear to seek balance through a deliberate configuration of expatriates and local executives in the subsidiary executive team. Overall, we find that environmental uncertainty is not directly linked with a one-size-fits-all executive appointment strategy. Instead, higher levels of uncertainty arising from complexity and competition are associated with a reduced preference for local executives in monitoring and control-oriented functional roles. With rising environmental complexity, this effect appears to be counterbalanced by a greater preference for local executives in implementation-oriented functional roles. However, we do not find evidence of a significant relationship between environmental turbulence and functional role appointments.

Keywords: Multinational companies (MNC), strategic human capital, top management team composition, executive team configuration, environmental uncertainty

Suggested Citation

Sonkova, Marketa and Karim, Samina, Managing Uncertainty: Executive Appointments in Foreign Subsidiary Environments (October 1, 2013). Boston U. School of Management Research Paper No. 2520326. Available at SSRN: https://ssrn.com/abstract=2520326 or http://dx.doi.org/10.2139/ssrn.2520326

Marketa Sonkova (Contact Author)

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Samina Karim

Northeastern University ( email )

Boston, MA 02115
United States

HOME PAGE: http://www.damore-mckim.northeastern.edu/faculty/k/karim-samina/

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