Journal of Business Research
Institutional differences between countries influence strategic choices and performance of international businesses, but the unintended effects of legal institutions on firm legitimacy have received less attention. We argue that, while minority shareholder rights protection in an investment location does not directly protect shareholder interests abroad, the normative and mimetic effects it has on host country managers can mitigate agency problems. Using Japanese FDI established between 1986 and 2013 we find that (a) subsidiaries established in host countries with higher shareholder rights protection employ a smaller proportion of Japanese expatriates, (b) shareholder rights protection enhances a country’s FDI attractiveness, and (c) that the impacts of shareholder rights protection on expatriate ratio and location attractiveness are stronger when firm ownership is concentrated among exchange-listed firms. This research contributes to the literature on institutional difference in international business, in particular by highlighting the value of studying the imprinting effects of regulations.
Institutional distance, Expatriate staffing, Foreign direct investment, Institutional theory
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Global Innovation and Leadership; Management
Nathaniel C. Lupton, Vishaal Baulkaran, and Yeonji No. "Subsidiary staffing, location choice, and shareholder rights effectiveness" Journal of Business Research (2022): 222-231. https://doi.org/10.1016/j.jbusres.2022.07.007