Do Japanese MNCs Use Expatriates to Contain Risk in Asian Host Countries?

19 Pages Posted: 22 Feb 2016

See all articles by Jean Pascal Bassino

Jean Pascal Bassino

Université Lyon 1 - Ecole Normale Supérieure (ENS) de Lyon

Marion Dovis

Universities of Marseille - Centre d'Economie et de Finances Internationales (CEFI)

Pierre van der Eng

Australian National University - College of Business & Economics

Date Written: March 1, 2015

Abstract

We investigate the impact of host country risk on the expatriation strategies of multinational firms, using data on Japanese subsidiary firms in manufacturing industry in 13 host countries in Asia. We find that country risk is negatively correlated with the degree of expatriation and that, rather than host country risk, firm-specific factors (particularly capital intensity, ownership share of parent firms in subsidiaries and the age of the venture) explain most of the variation in the degree to which subsidiaries rely on Japanese expatriates. Contrary to previous studies, the capital intensity of production is a key explanatory firm-specific variable that correlates positively with the degree of expatriation. Japanese MNCs do not rely on expatriates to off-set host country risk, but to mitigate risk to parent investment in subsidiaries.

Keywords: Expatriates, Foreign Direct Investment, Multinational Companies, Country Risk, Japan, Asia

JEL Classification: G32, M12, M16, N85

Suggested Citation

Bassino, Jean Pascal and Dovis, Marion and van der Eng, Pierre, Do Japanese MNCs Use Expatriates to Contain Risk in Asian Host Countries? (March 1, 2015). Crawford School Research Paper No. 2, Available at SSRN: https://ssrn.com/abstract=2574116 or http://dx.doi.org/10.2139/ssrn.2574116

Jean Pascal Bassino

Université Lyon 1 - Ecole Normale Supérieure (ENS) de Lyon ( email )

15, parvis Rene Descartes BP 7000
Lyon Cedex 07, 69342
France

Marion Dovis

Universities of Marseille - Centre d'Economie et de Finances Internationales (CEFI) ( email )

Château La Farge
Route des Milles
Les Milles, F-13290
France

Pierre Van der Eng (Contact Author)

Australian National University - College of Business & Economics ( email )

Research School of Management
26C Kingsley Street
Acton, ACT 2601
Australia
+61 2 6125 5438 (Phone)
+61 2 6125 8796 (Fax)

HOME PAGE: http://https://www.cbe.anu.edu.au/about/staff-directory/?profile=Pierre-van%20der%20Eng

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