Multinational firm knowledge, use of expatriates and foreign subsidiary performance

Abstract

This study examines the relationship between a multinational firm's technological and marketing knowledge, its expatriate staffing practices, and the performance of its foreign subsidiaries. Expatriates are conceptualized as playing a key role in facilitating the transfer and redeployment of a parent firm's knowledge to its subsidiary. Our analysis of 3,848 Japanese subsidiaries indicates that the expatriate ratio: (1) positively moderates the effect of a parent's technological knowledge on subsidiary performance in the short term, and (2) negatively moderates the impact of the parent firm's marketing knowledge on subsidiary performance in the medium term, but not in the short term. We also find that expatriates' influence on knowledge transfer disappears over the long term, illustrating the temporal nature of knowledge transfer.