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Mimicry, Knowledge Spillover and Expatriate Assignment Strategy in Overseas Subsidiaries

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Abstract

Based on neo-institutional theory and knowledge spillover, we argue that the probability of a firm assigning an expatriate manager to a foreign subsidiary is influenced by a combination of mimicry and knowledge spillover from any existing expatriate community in the foreign location. The expatriate community’s influence is hypothesized to be weaker when the firm’s ownership share in its foreign subsidiary is greater but stronger when the cultural distance between a firm’s home country and the foreign host country is greater. Data on 95,156 foreign-invested manufacturing ventures in China is used to test these predictions. The findings show an inverted U-shaped relationship between the assignment of expatriates and the number of expatriates previously sent to the same location by prior foreign investors. This relationship is shown to be moderated by subsidiary ownership, but not by the cultural distance between the investor’s home country and the host country. Implications for research and practice are discussed.

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Notes

  1. In the robustness checks, we also captured the community influence by using the cumulative number of expatriates sent out by prior foreign investors during the recent 2, 3 and 4 years within each province. The results are largely consistent with our predictions.

  2. The plot is available on request.

  3. We sincerely thank one anonymous reviewer’s suggestion on this point.

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Funding

The research is supported in part by the Research Grants Council of Hong Kong (HKUST#16505817).

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    Authors and Affiliations

    1. Department of Global Economics and Management, University of Groningen, Groningen, The Netherlands

      Lipeng Gary Ge

    2. Organization, Strategy, and International Management, Naveen Jindal School of Business, University of Texas at Dallas, Richardson, TX, USA

      Cuili Qian

    3. Department of Management, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong

      Jiatao Li

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    Ge, L.G., Qian, C. & Li, J. Mimicry, Knowledge Spillover and Expatriate Assignment Strategy in Overseas Subsidiaries. Manag Int Rev 59, 981–1007 (2019). https://doi.org/10.1007/s11575-019-00396-5

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