Consequences of expatriate top manager replacement on foreign subsidiary performance

Ralf Bebenroth, Fabian J. Froese

Research output: Contribution to journalArticlepeer-review

30 Citations (Scopus)

Abstract

Integrating expatriate staffing and leadership succession literature, this study investigates the influence of expatriate top manager replacement on foreign subsidiary performance and the moderating effects of subsidiary context. Building on a refined understanding of agency theory and evidence from 2113 firm-year observations, including 260 expatriate successions, this study shows that when expatriates are replaced, regardless by whom (either host-country national or expatriate manager), the performance of the subsidiaries declines, suggesting that the departure of expatriate top managers often see subsidiaries being left in a less than favorable condition. If the subsidiary's prior performance has been unsatisfactory, the newly appointed expatriate might not be able to prevent further deterioration of its performance. Replacing expatriates with host-country national managers can help improve subsidiary performance, but this usually happens in older, more established subsidiaries. These findings framed in a refined agency theory provide us a more in-depth understanding of expatriate staffing failure.

Original languageEnglish
Article number100730
JournalJournal of International Management
Volume26
Issue number2
DOIs
Publication statusPublished - 2020 Jun

Bibliographical note

Publisher Copyright:
© 2019 Elsevier Inc.

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Strategy and Management

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