Tsinghua University, Beijing, China

Does Technology Influence Management Localization Decisions in MNCs? And what's the effect?

The literature on management localization is rich and mature, but generally neglects to investigate the role of technology in making the localization decision. In the last twenty years technology and R&D has become more global, and thus provides a basis for testing the role of technology in HR localization. Our research question thus is: Does technology influence management localization decisions in multinational companies? Our research is motivated by the observation that technology is often a source of competitive advantage for MNCs and thus is tightly protected and controlled, which is best done by maintaining an expatriate senior management, while another observation leads to the conclusion that technology is exploited best only if the company is well integrated within the local scientific and engineering community, which is best done by localizing senior management.
Our research focuses on MNCs with subsidiaries in China because of its eminence as a FDI attractor. Based on a literature review, we first identify shortcomings in the localization and technology management literature before proposing hypotheses and measurements for testing these hypotheses. We then analyze and discuss our findings from qualitative interview-based and quantitative survey-based research conducted in China between Summer 2003 and Winter 2004. Our (initial) findings suggest that the correlation between technology-intensity and management localization depends on the specific mission of the subsidiary within the host community as well as towards the parent company.