Managers of international subsidiaries, especially subsidiary CEOs, operate at critical interfaces within multinational enterprises (MNEs) and hold strategic responsibility for the operations in their country. Yet, their impact on subsidiary performance has received scant research attention. Building on the subsidiary entrepreneurship and strategic leadership literatures, we develop a model of how subsidiary CEOs' entrepreneurial leadership affects subsidiary performance, and how this relationship is moderated by the subsidiary context that determines managerial discretion. We combine survey data of 291 international subsidiaries in South Korea with archival data to test our hypotheses. Our results show that subsidiary CEOs' entrepreneurial leadership enhances subsidiary performance and that this relationship is strengthened by managerial discretion. Our study highlights the pivotal role of subsidiary CEOs within MNEs and contributes to a microfoundational understanding of international subsidiary management.
Academy of Management Proceedings
We examine whether deploying host-country nationals (HCNs) as subsidiary CEOs in multinational enterprises (MNEs) overseas subsidiaries may lead to stronger relational ties to key host-country business contacts and government officials. Furthermore, drawing on an agency perspective of MNE-subsidiary relationship, we examine how strong relational ties may hurt subsidiary performance and how incentive compensation and monitoring may influence this relationship. We combined archival and survey data for 272 MNE subsidiaries operating in South Korea. Our results reveal a paradox in which appointing HCNs subsidiary CEO enhances relational ties to host- country business contacts but such strong relational ties also hurts subsidiary performance, while incentive compensation and monitoring can mitigate such agency costs. Our theory and findings provide unique insights to MNE overseas subsidiary staffing, social embeddedness, and subsidiary performance.
host country nationals
relation ties strength