Mimicry, Knowledge Spillover and Expatriate Assignment Strategy in Overseas Subsidiaries

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

Entrepreneurs' socioeconomic status and government expropriation in an emerging economy

Research Summary This study focuses on a salient challenge for entrepreneurs in emerging economies: government expropriation. Drawing on signaling arguments, we propose that an owner's high socioeconomic status (SES) attracts government attention to her start-up by conveying information about its resource endowments. The empirical tests based on start-ups in China support that an owner's high SES increases government expropriation. The effect is stronger for start-ups in regions with greater income inequality or in those where the legal system is less developed. High-SES entrepreneurs can mitigate the risk of government expropriation by building political connections. Managerial Summary Institutional voids in emerging economies pose a major threat to start-ups in the form of government expropriation. This research finds that the threat is more severe for start-ups with high-SES entrepreneurs because they have strong resource-mobilization capabilities and easily become expropriation targets. Further, this research suggests that two measures help protect high-SES entrepreneurs from government expropriation: locating their start-ups in regions with low income inequality or a well-developed legal system, and building connections with the government in order to exchange favors with government officials

Entrepreneurs' socioeconomic status and government expropriation in an emerging economy

Research Summary This study focuses on a salient challenge for entrepreneurs in emerging economies: government expropriation. Drawing on signaling arguments, we propose that an owner's high socioeconomic status (SES) attracts government attention to her start-up by conveying information about its resource endowments. The empirical tests based on start-ups in China support that an owner's high SES increases government expropriation. The effect is stronger for start-ups in regions with greater income inequality or in those where the legal system is less developed. High-SES entrepreneurs can mitigate the risk of government expropriation by building political connections. Managerial Summary Institutional voids in emerging economies pose a major threat to start-ups in the form of government expropriation. This research finds that the threat is more severe for start-ups with high-SES entrepreneurs because they have strong resource-mobilization capabilities and easily become expropriation targets. Further, this research suggests that two measures help protect high-SES entrepreneurs from government expropriation: locating their start-ups in regions with low income inequality or a well-developed legal system, and building connections with the government in order to exchange favors with government officials