Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises
Abstract Institutional distance is well-recognised as having a significant influence on MNE subsidiary performance in host countries. However, there is less clarity as to how the institutional distance is managed by top management teams of MNEs. Specifically, it is not known whether the previous wor...
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| Format: | Article |
| Language: | English |
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Springer Nature
2024-01-01
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| Series: | Humanities & Social Sciences Communications |
| Online Access: | https://doi.org/10.1057/s41599-023-02533-w |
| _version_ | 1797350045343809536 |
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| author | Xiaojing Lu Sebastian Jacques Manuel Boo Xiaming Liu |
| author_facet | Xiaojing Lu Sebastian Jacques Manuel Boo Xiaming Liu |
| author_sort | Xiaojing Lu |
| collection | DOAJ |
| description | Abstract Institutional distance is well-recognised as having a significant influence on MNE subsidiary performance in host countries. However, there is less clarity as to how the institutional distance is managed by top management teams of MNEs. Specifically, it is not known whether the previous work experiences of the top management team (TMT) can moderate how institutional distance impacts subsidiary performance. The purpose of our research is to address the research question, how do different work experiences among the TMT moderate the relationship between institutional distance and subsidiary performance? To empirically answer this question, we use a sample of 6119 Chinese MNE subsidiaries with 34,870 TMT managers. We apply ordinary least square (OLS) regression and bias-corrected and accelerated bootstrap (BCa) to the data. The results indicate that the strength of the negative relationship between institutional distance and MNE subsidiary performance is conditional on the different work experiences of the TMT. We show that the negative relationship between institutional distance and MNE subsidiary performance is strengthened with an increase in expatriates in the TMT who have home country work experience (β = −0.346, p < 0.05) but mitigated with an increase of managers in the TMT who have host country work experience (β = 0.129, p < 0.01). Additionally, the negative relationship between institutional distance and subsidiary performance is weakened by increasing diversity of TMT’s international experience (β = 0.555, p < 0.01). Notably, the TMT’s international experience in weak-institution markets has a more salient mitigating effect on the negative relationship than work experienced gained in strong-institution markets. This study contributes to the integration of TMT perspective into institutional management and has practical implications for the staffing strategy of MNE subsidiaries. |
| first_indexed | 2024-03-08T12:39:09Z |
| format | Article |
| id | doaj.art-2861fb6f7e3b43669a4f9ba29364679c |
| institution | Directory Open Access Journal |
| issn | 2662-9992 |
| language | English |
| last_indexed | 2024-03-08T12:39:09Z |
| publishDate | 2024-01-01 |
| publisher | Springer Nature |
| record_format | Article |
| series | Humanities & Social Sciences Communications |
| spelling | doaj.art-2861fb6f7e3b43669a4f9ba29364679c2024-01-21T12:14:10ZengSpringer NatureHumanities & Social Sciences Communications2662-99922024-01-0111111510.1057/s41599-023-02533-wIs the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprisesXiaojing Lu0Sebastian Jacques Manuel Boo1Xiaming Liu2Faculty of Business and Management, BNU-HKBU United International CollegeFaculty of Business and Management, BNU-HKBU United International CollegeBirkbeck Business School, Faculty of Business and Law, Birkbeck College, University of LondonAbstract Institutional distance is well-recognised as having a significant influence on MNE subsidiary performance in host countries. However, there is less clarity as to how the institutional distance is managed by top management teams of MNEs. Specifically, it is not known whether the previous work experiences of the top management team (TMT) can moderate how institutional distance impacts subsidiary performance. The purpose of our research is to address the research question, how do different work experiences among the TMT moderate the relationship between institutional distance and subsidiary performance? To empirically answer this question, we use a sample of 6119 Chinese MNE subsidiaries with 34,870 TMT managers. We apply ordinary least square (OLS) regression and bias-corrected and accelerated bootstrap (BCa) to the data. The results indicate that the strength of the negative relationship between institutional distance and MNE subsidiary performance is conditional on the different work experiences of the TMT. We show that the negative relationship between institutional distance and MNE subsidiary performance is strengthened with an increase in expatriates in the TMT who have home country work experience (β = −0.346, p < 0.05) but mitigated with an increase of managers in the TMT who have host country work experience (β = 0.129, p < 0.01). Additionally, the negative relationship between institutional distance and subsidiary performance is weakened by increasing diversity of TMT’s international experience (β = 0.555, p < 0.01). Notably, the TMT’s international experience in weak-institution markets has a more salient mitigating effect on the negative relationship than work experienced gained in strong-institution markets. This study contributes to the integration of TMT perspective into institutional management and has practical implications for the staffing strategy of MNE subsidiaries.https://doi.org/10.1057/s41599-023-02533-w |
| spellingShingle | Xiaojing Lu Sebastian Jacques Manuel Boo Xiaming Liu Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises Humanities & Social Sciences Communications |
| title | Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises |
| title_full | Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises |
| title_fullStr | Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises |
| title_full_unstemmed | Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises |
| title_short | Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises |
| title_sort | is the relationship between institutional distance and subsidiary performance moderated by top management team evidence from chinese multinational enterprises |
| url | https://doi.org/10.1057/s41599-023-02533-w |
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