General Manager Succession in Multinational Enterprise Subsidiaries
Abstract
This dissertation, based on interviews with over 40 managers and longitudinal data from over 1,900 foreign subsidiaries, develops new insights regarding subsidiary general manager (GM) changes in multinational enterprises (MNEs).
Essay 1 addresses whether GM successions accelerate or decelerate the momentum for further GM change, and improve or disrupt subsidiary performance. I show that MNE managers learn from prior GM change in order to appoint a right candidate, thus improving subsidiary performance and decelerating the momentum for further succession. But the reduced marginal costs of making succession decisions increasingly render GM change more likely. The accumulated shocks ultimately translate into poor subsidiary performance and lower subsidiary survival likelihood. To improve survival, I show that the subsidiary can deploy a parent country national (PCN) GM at its founding, followed by host country national (HCN) successors.
Essay 2 provides a more accurate account of subsidiary GM successions when subsidiary performance disappoints. It challenges the strategic contingencies perspective, which holds that GMs can accrue power from strategic configurations to weaken the existing association between performance and GM succession. Taking the MNE attention perspective, I show that some strategic configurations that increase subsidiary GM power can also enhance MNE monitoring, thus strengthening rather than weakening the subsidiary performance–subsidiary GM succession link. I conceptualize this as the performance–attention–succession model. I also show that GM succession is an effective subsidiary turnaround strategy.
Essay 3 elaborates a nuanced categorization of subsidiary GM successors. Extant studies suggest that to better address host country business practices and cultures, it is sensible to deploy HCN subsidiary GMs. The data, however, show that using HCN GM successors is not always the best strategy. For HCN GMs promoted from within the subsidiary, ex post opportunism may arise, resulting in unsatisfactory subsidiary performance. Appointing HCN GMs from outside the subsidiary may limit opportunism, but it can entail divided engagement. Expatriating PCN subsidiary GMs, on the other hand, may beget over-reliance on existing practices. I reveal two safeguards that can address bounded reliability.