Cultures & Institutions: country-of-origin effects in MNC “ethnocentric” staffing practices

In this study, we infuse a fresh perspective into research on global staffing – a topic that has been studied for at least four decades – by exploring the mechanisms that underly country-of-origin effects in MNCs’ use of parent country nationals (PCNs) in foreign subsidiaries’ top positions.

Although the practice is often called “ethnocentric”, our findings suggest that MNCs not only “won’t” globalize their staffing, due to their home country’s dispositional tendency to prefer PCNs, but also “can’t” globalize their staffing, due to their home country’s contextual constraints that create hurdles for communication between headquarters and subsidiaries.

  • Lee H-J, Yoshikawa K, Harzing A.W. (2022) Cultures and Institutions: Dispositional and contextual explanations for country-of-origin effects in MNC “ethnocentric” staffing practices. Organization Studies. in press. Available online... - Publisher's version - Related blog post

Abstract

Although the country-of-origin effect on staffing practices of multinational corporations (MNCs) is well-known, its underlying mechanisms are under-theorized. Drawing on the cross-cultural management and comparative institutionalism literatures, we propose an overarching, theory-based framework with two mechanisms, dispositional and contextual, that might explain country-of-origin effects in MNCs’ use of parent-country nationals (PCNs) in their foreign subsidiaries’ top management teams.

The tendency of MNCs from some home countries to staff these positions with PCNs is typically labeled as “ethnocentric”, a word imbued with negative intentions referring mainly to the dispositional rationale behind this staffing choice.

However, fuzzy-set qualitative comparative analysis (fsQCA) of staffing practices of MNCs from ten home countries shows that both mechanisms – dispositional and contextual – have considerable explanatory power. Our methodological approach enables us to analyze conceptually distinct, yet empirically intertwined, societal-level explanations as a pattern, and thus offers a viable solution to integrate different perspectives in international and comparative research.

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