The Impact of Subsidiary Top Management Team National Diversity On Subsidiary Performance: Knowledge and Legitimacy Perspectives

Zusammenfassung

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This study examines the impact of nationality composition within subsidiary top management teams (STMTs) on subsidiary performance. It first gives a review of the multinational team literature. It concludes that nationality diversity is beneficial when it is relevant to a multinational team's task. The study then draws upon two complementary theoretical perspectives: knowledge and legitimacy. It proposes that a heterogeneous STMT nationality composition may enhance subsidiary performance with the effect being stronger in subsidiaries of longer years of operation. Hypotheses were tested in a sample of STMTs from Japanese Multinational Corporations. The study finds that STMT nationality heterogeneity was positively related to subsidiary labor productivity. An interaction effect was also found. As the number of years a subsidiary had been in operation increased, so did the effect of STMT nationality heterogeneity on subsidiary performance.

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Auszug

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The Impact of Subsidiary Top Management Team National Diversity On Subsidiary Performance: Knowledge and Legitimacy Perspectives

Introduction

The role of the top management team (TMT) in strategic decision-making and firm performance is well documented (Finkelstein/Hambrick 1996). Recently, accelerated globalization has drawn scholarly attention to multinational corporations (MNCs) and the role of the headquarters' TMT characteristics in MNC internationalization and performance (Athanassiou/Nigh 2002, Carpenter/Sanders/Gregersen 2001). Additionally, growing attention has been paid to multinational teams - teams with members from different countries and cultural backgrounds (DiStefano/Maznevski 2000, Earley/Mosakowski 2000, Mazneviski 1994a, McLeod/Lobel/Cox 1996, Watson/Kumar/Michaelsen 1993).

Unfortunately, there has been little research on the influence of the nationality composition of subsidiary TMTs (STMTs) on subsidiary performance in MNCs. STMTs may include expatriate parent country nationals (PCNs), host country nationals (HCNs), and, in some cases, third country nationals (TCNs) (Dowling/Welch/Schuler 1999). STMT nationality composition refers to the distribution of PCNs, HCNs, and, in some cases, TCNs in STMTs (Gong 2003a).' Due to the globalization of business, the use of nationally diverse teams has increased rapidly (Adler 1997). Between 1995 and 1998, the percentage of companies with non-national directors increased from 39% to 60% (Alexander/Esser 1999). Researchers found that nationality is the dominant sense making vehicle used by members in nationally diverse teams (Salk/Shenkar 2001) and a potent factor that explains variations in beliefs and cognitive schemas (Hambrick/Davidson/Snell/Snow 1998, Laurent 1983). Given the growing utilization of nationally diverse teams and the importance of nationality, this study examines the influence of STMT nationality composition on subsidiary performance.

Literature Review

Top Management Team Literature

The study of STMT nationality composition and subsidiar...

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