R&D employee tenure in MNC subsidiaries: the role of institutional distance and experience

Abstract

Long tenure of research and development (R&D) employees helps organisations to utilise employees' knowledge over a sustained time period and strengthen their competitive advantage. It also allows organisations to benefit from the training investments made on their R&D employees. Thus, identifying the determinants of R&D employees' tenure is crucial for designing effective R&D employee retention strategies. This paper analyses the factors explaining R&D employees' tenure in the subsidiaries of multinational corporations (MNCs). Building on institutional theory, we claim that formal and informal institutional distance between MNCs' home and host country might lead to R&D employees' short tenure in subsidiaries. We further suggest that R&D employees' international experience and MNCs' host country experience play a moderating role. We find support for our hypotheses by mobilising an original database that combines patent data and the LinkedIn profiles of 939 R&D employees in 256 MNC subsidiaries in India.

Internationalization of transnational entrepreneurial firms from an advanced to emerging economy: the role of transnational mixed-embeddedness

“…In international business literature, institutional distance refers to differences in formal and informal institutions between countries of origin (in this case, the host country) and the destination country (in this case, the home country), and it has long been seen as a critical barrier to the internationalization of firms (Gaur and Lu, 2007; Xu and Shenkar, 2002). Researchers argue that when there are high institutional differences, firms' strategies do not fit with the new destination country as these strategies are often inspired by the country of origin (Borah et al. , 2022).…”

“…Prior research shows that localized human resource practices effectively attract and retain talent (e.g. Borah et al. , 2022).…”

“…2. For instance, international business and management scholars still use Hofstede's and Globe's cultural scores while explaining the culture of countries, which were calculated decades ago (e.g. see Borah et al ., 2022; Kostova et al ., 2020). …”

Linking formal institutional distance, subsidiary autonomy for innovation and subsidiary global (value-added) mandates

“…These negative implications are not just limited to subsidiary management but also to the subsidiary managers. For example, it is found that formal and informal IDs between the home and host country lead to shorter tenures in the subsidiary for the R&D employees (Borah et al ., 2023). It is argued that distance leads to a liability of outsidership (Johanson and Vahlne, 2009), where the subsidiary is distant from local firms and industry.…”

In the Context of Digital Finance, Can Knowledge Enable Manufacturing Companies to Be More Courageous and Move towards Sustainable Innovation?

“…In this paper, with reference to relevant studies on corporate innovation performance, variables related to corporate innovation are selected as controls. Age at market, number of R&D employees [68], and R&D investment [69] have been shown to be key factors influencing firms' innovation performance. Combining existing research, the number of years on the market (Cage), the number of corporate R&D employees (Employee), and corporate R&D investment (Research) are selected as control variables.…”