International assignments, human capital resources and MNC subsidiary performance in CEE countries

Abstract

Purpose Multinational companies (MNCs) expect the highest return from their locally dispersed units, and thus the factors that impact the success of the subsidiaries have been of great interest to the literature. Building on the resource-based view, this paper aims to explore the effects of a set of contextual resources, in particular, the international staffing (expatriate and inpatriate assignments) and human capital resources on the performance of foreign-owned subsidiaries in Central and Eastern European (CEE) countries. Design/methodology/approach By means of a survey applied on 295 MNC subsidiaries from five CEE countries (Hungary, Romania, Poland, Serbia and the Czech Republic), the paper reveals the main relationships between contextual subsidiary level resources (the in-coming and out-going international assignments, human capital resources at both employee and management level and the human resource knowledge transfer) and the subsidiary performance. Findings This paper brings empirical support for the positive relationship between the MNCs’ contextual resources, in particular, the inpatriate assignments, the human capital resources and the performance of the locally dispersed subsidiaries. The findings show an interaction effect between the inpatriate and the expatriate assignments on the performance of the subsidiaries. The empirical results bring an insight into the understanding of the added value that the out-going inpatriate assignments and the human capital resources have for the global businesses. Research limitations/implications This paper is empirical in nature and calls for further exploration of the topic on larger random MNC samples. The findings of this paper have the potential to improve how the management of the global businesses leverages the inpatriate assignments and human capital resources, thus leading to more value-added to stakeholders. Originality/value The originality of the paper stems from the implementation of the empirical survey in the dynamic but under-researched context of the CEE region. Thus, the findings reveal valuable input about the contribution of the human capital resources at the subsidiary level for the performance of the locally dispersed MNC units in five European developing countries.