Complementarities between Entry Mode Equity and Human Capital Decisions

Pedro Faria; Wolfgang Sofka; Bernardo M Pimentel; Miguel Torres Preto

doi:10.5465/ambpp.2017.11146abstract

Complementarities between Entry Mode Equity and Human Capital Decisions

Pedro Faria, Wolfgang Sofka, Bernardo M Pimentel, Miguel Torres Preto

Faculty of Business and Law

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

Abstract

We investigate how human capital decisions made at entry influence the survival of MNC subsidiaries and how they interact with equity entry mode decisions. Our theoretical reasoning claims that some human capital configurations perform better in bundling MNC-specific assets with complementary host country specific assets. We integrate concepts from strategic human capital literature into a model of MNC entry modes. We hypothesize that subsidiaries with a higher share of employees with work experience in other MNC subsidiaries in the host country or with a higher share of expatriates in the subsidiaries management team at entry have a higher probability of survival. Moreover, we reason that these positive effects increase when the subsidiary operates as a joint venture. We test and support these hypotheses with a sample of 5,236 MNC subsidiaries that entered the Portuguese market in the period 1994-2011. Our findings have immediate relevance for both research and practice.

Original language	English
Title of host publication	Academy of Management Proceedings
Pages	111-146
Number of pages	36
Volume	2017
DOIs	https://doi.org/10.5465/ambpp.2017.11146abstract
Publication status	Published - 30 Nov 2017

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10.5465/ambpp.2017.11146abstract

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title = "Complementarities between Entry Mode Equity and Human Capital Decisions",

abstract = "We investigate how human capital decisions made at entry influence the survival of MNC subsidiaries and how they interact with equity entry mode decisions. Our theoretical reasoning claims that some human capital configurations perform better in bundling MNC-specific assets with complementary host country specific assets. We integrate concepts from strategic human capital literature into a model of MNC entry modes. We hypothesize that subsidiaries with a higher share of employees with work experience in other MNC subsidiaries in the host country or with a higher share of expatriates in the subsidiaries management team at entry have a higher probability of survival. Moreover, we reason that these positive effects increase when the subsidiary operates as a joint venture. We test and support these hypotheses with a sample of 5,236 MNC subsidiaries that entered the Portuguese market in the period 1994-2011. Our findings have immediate relevance for both research and practice.",

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N2 - We investigate how human capital decisions made at entry influence the survival of MNC subsidiaries and how they interact with equity entry mode decisions. Our theoretical reasoning claims that some human capital configurations perform better in bundling MNC-specific assets with complementary host country specific assets. We integrate concepts from strategic human capital literature into a model of MNC entry modes. We hypothesize that subsidiaries with a higher share of employees with work experience in other MNC subsidiaries in the host country or with a higher share of expatriates in the subsidiaries management team at entry have a higher probability of survival. Moreover, we reason that these positive effects increase when the subsidiary operates as a joint venture. We test and support these hypotheses with a sample of 5,236 MNC subsidiaries that entered the Portuguese market in the period 1994-2011. Our findings have immediate relevance for both research and practice.

AB - We investigate how human capital decisions made at entry influence the survival of MNC subsidiaries and how they interact with equity entry mode decisions. Our theoretical reasoning claims that some human capital configurations perform better in bundling MNC-specific assets with complementary host country specific assets. We integrate concepts from strategic human capital literature into a model of MNC entry modes. We hypothesize that subsidiaries with a higher share of employees with work experience in other MNC subsidiaries in the host country or with a higher share of expatriates in the subsidiaries management team at entry have a higher probability of survival. Moreover, we reason that these positive effects increase when the subsidiary operates as a joint venture. We test and support these hypotheses with a sample of 5,236 MNC subsidiaries that entered the Portuguese market in the period 1994-2011. Our findings have immediate relevance for both research and practice.

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