The origin and nationality of general manager successors in local-market-seeking MNE subsidiaries

The extant literature suggests that it is sensible to deploy a host-country national (HCN) general manager (GM) successor in the local-market-seeking subsidiaries of multinational enterprises (MNEs). However, limited attention has been paid to whether subsidiary GMs come from outside or inside an organization. By simultaneously considering the nationality and origin of subsidiary GM successors, our case-based study provides a sharper theory of succession decision-making in the context of local-market-seeking subsidiaries. We demonstrated that the use of HCN GMs is not always the best strategy, and can even be the worst option because HCN GM successors promoted from within the subsidiary may pursue self-interest with deceitfulness after they take office. Using HCNs from outside the subsidiary can limit this issue but may entail a new challenge resulting from identity-based discordance. Our interview data showed a managerial safeguard, which we term ex ante socialization, to address this challenge.

 Our study has several practical implications. First, although it seems unwise to play down insiders’ talents, the use of insider HCN subsidiary GMs is not always a good approach to fully achieving a subsidiary’s local-market-seeking goal. During the dual identification development process, insider HCN subsidiary GMs can lose their sense of affiliation with both entities, as they may be pulled in two directions. To avoid this issue, we suggest that MNE decision-makers consider the possibility of expatriating an HCN GM who is equally capable yet may behave less opportunistically. But building a cadre of such competent talent can be challenging. Second, as competition for talent to manage foreign subsidiaries steadily intensifies while, at the same time, individuals may be reluctant to relocate internationally, an increasing number of MNEs are beginning or plan to hire local talent from within the host country. However, it is crucial to ensure that the alignment between the organization’s and subsidiary GM’s mission and goals is already in place when the outsider HCN subsidiary GM is selected. Enabled by trust in prior interactions, this is an appropriate antecedent condition that can be even more germane than on-the-job acculturation.Liang (Arthur) Li, Andreas P.J Schotter & Paul W. Beamish (2024). The origin of nationality of general manager successors in local-market-seeking MNE subsidiaries (external link) . International Business Review, 102272.