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"An Empirical Investigation of Expatriate Utilization: Resource-based, Agency, and Transaction Costs Perspectives"

Danchi Tan and Joseph T. Mahoney


First Author :

Danchi Tan
International Trade
University of Illinois at Urbana-Champaign
National Chengchi University
64, Chih-nan Rd.,Sec. 2
Wenshan, Taipei 11623

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Second Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign
1206 S. Sixth Street, M/C 706
Champaign, IL 61820

Abstract :
This paper develops a new integrative framework explaining and predicting multinational firmsí international staffing decisions based on resource-based, agency, and transaction costs theories. In this framework, a firm considers (1) the relative values that expatriates / local managers can bring to the firm, and (2) the relative control that the firm is able to exercise over expatriates and local managers through managerial contracting, when making strategic international staffing decisions. Accordingly, we identify a set of target industry characteristics and multinational firm characteristics that are predicted to influence international staffing decisions, and we examine these decisions on a sample of 365 Japanese manufacturing subsidiaries in the United States.
Keywords :
Agency costs, and expatriates, resource-based theory, transaction costs
Footnotes & Acknowledgements :
We are grateful to Richard C. Levin, Alvin K. Klevorick, Richard R. Nelson, and especially Sidney G. Winter for providing us with the data from their paper in Brookings Papers on Economic Activity (1987). We also thank Ruth Aguilera, Ayse Olcay Costello, Michael Hitt, Jeffrey Krug, Biing-Shen Kuo, James Mahoney, and Weijen Wen for their insightful comments and suggestions. The usual disclaimer applies. Financial support from the Center for International Business Education and Research (CIBER) at the University of Illinois at Urbana-Champaign, and Taiwan National Science Council is gratefully acknowledged.
Manuscript Received : 2002
Manuscript Published : 2002
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