Dr Hyeyoun Park

We examine how subsidiaries can implement business expansion successfully to capitalize on growth potentials. Building on our baseline hypothesis, which examines the effect of the extent of business expansion on subsidiary divestment, we also identify the boundary condition of the tendency of subsidiary’s learning behavior in foreign expansion. Specifically, we argue that subsidiaries that expand multiple businesses through competence-creating learning behaviors are more likely to be divested due to increasing complexity. We further suggest a remedial condition to offer a viable approach to implement business expansion through competence-creating learning successfully. Based on a sample of 6,040 foreign subsidiaries operating over 14 years, we show that affiliates are more likely to expand into unfamiliar business domains successfully if they have operated a wider scope of business domains.

This research proposes a strategic human capital alignment framework to examine whether the alignment between subsidiary strategy (i.e., exportoriented vs local market-oriented strategy) and human capital (i.e., parent firm vs local-specific human capital) is positively related to subsidiary performance in multinational enterprises (MNEs). We further explore two important exogenous (i.e., foreign exchange rate change) and endogenous (i.e., MNE international experience) boundary conditions, since they may adjust the positive effect of strategic human capital alignment on performance. The analysis, based on 5604 subsidiary observations of 423 MNEs from 1990 to 2012, confirms the positive synergic effect of aligning subsidiary strategy and human capital and shows the moderating effects of foreign exchange rate change and MNE international experience. By presenting the importance of subsidiary strategy – global staffing alignment and the roles of external economic environments and internal organizational capabilities as boundary conditions, the strategic human capital alignment framework suggests that what makes human capital valuable for the firm is its alignment with strategic orientation. Thus managers should carefully deploy the appropriate type of human capital to fulfill the requisite organizational strategy and take into account changing external and internal contextual conditions in applying the framework.