International Human Resource Management-MJ Version

as the preferred alternative for senior positions in subsidiaries. Direct control of
subsidiary operations will also be more important if the level of cultural dis-
tance between home and host country is high. In this case, HQ managers
might not trust the information they receive from local managers. In addition,
HQ managers might fear that local managers are less committed to the com-
pany. Furthermore, communication between people from different cultural
backgrounds can be very difficult (even if they speak the same language) and
the opportunity for misunderstandings is usually high (Boyacigiller, 1990).
Therefore, headquarters managers will prefer to have at least some home coun-
try managers in important positions to facilitate the information flow. Larger
MNCs have more PCNs as managing directors since they have more manager-
ial resources and are more likely to have a formal management development
program in operation that involves the transfer of managers around the world.
MNCs with a research intensive product are more likely to feel the need to
transfer at least some of this knowledge to their subsidiaries and to train local
managers (Hamill, 1989; Ronen, 1986). Our study did not find support for this
relationship, but a recent study by Tan and Mahoney (2002) found that R&D
intensity did increase the number of PCNs for Japanese firms, though not the

Composing an International Staff 257

Parent country/company

+ Level of uncertainty avoidance

+ Cultural distance between

parent and host country

+ Size of the company

[+ R&D intensity]

Host country

− Education level

+ Political risk

− Cost of living higher than parent

company

Subsidiary characteristics

− Age

− Acquisition

+ Majority ownership

− Reporting distance from HQ

+ Size

− Performance

Industry

+ Banks & banking services

+ Security & commodity brokers

+ Printing & publishing

− Advertising agencies

− Computers & office equipment

− Electronics & equipment

− Food & related products

Likelihood of PCN in

managing director

position at foreign

subsidiaries

FIGURE 10.1

Factors influencing the choice between HCN and PCN