chapter  4
18 Pages

Expatriation and performance

ByRALF BEBENROTH, DONGHAO LI

The purpose of this study is to analyze whether foreign-based affiliates staffed with expatriates outperform others who rely to a higher degree on local managers. This research investigates performance and expatriation with three mediating variables: the relative size of the affiliate, the level of ownership, and the age of the affiliate. The study indicates a positive correlation between expatriation and the performance of the Japan-based foreign MNC affiliates. Better performing affiliates tend to be led by expatriate CEO top managers and there are more expatriates on the board. The higher the ownership share of the affiliate, the higher the chance of having an expatriated CEO top manager and expatriated board members dispatched to the affiliate. Affiliates’ performance also correlates positively with the percentage of ownership. Concerning relative size and expatriation, the study finds a partial confirmation of expected relationships. The relative size of the affiliates correlates positively with the ratio of expatriate board members but negatively with performance. The age of the affiliate did not show any correlation with either expatriation or performance. Implications are discussed.