The Determinants Of Expatriation In Japanese Multinationals: Vertical Business Groups And Executive Staffing Policies In Asia

We empirically examine the determinants of the decision whether or not to appoint an expatriate as the managing director of overseas affiliates for a sample of 844 Japanese manufacturing affiliates operating in Asia in 1995. Confirmation is found for hypotheses based on a control & coordination perspective on expatriation as well as a knowledge creation & learning perspective. Information interdependence and strategic interdependence between affiliate and parent increase the propensity to appoint expatriates, while localization of the affiliate reduces it. Organizational experience in the country, both of the affiliate and the firm, increases the probability that host country nationals are appointed. Inter-firm relationships within vertical keiretsu groups impact expatriation policies through inter-organizational information sharing in host countries and the mitigation of localization requirements due to intra-group transactions.