Dr. Katsuhiko Yoshikawa publishes a research article on multinational companies’ global staffing practices.

Dr. Katsuhiko Yoshikawa, Associate Professor and Vice President at Shizenkan University, has recently published an article on Organization Studies, one of the top research journals in organization management.

His study, co-authored with Dr. Hyun-Jung Lee (London School of Economics and Political Science, United Kingdom) and Professor Anne-Wil Harzing (Middlesex University Business School, United Kingdom), investigates why multinational corporations (MNCs) from particular countries, such as Japan, South Korea, and France, continue to extensively use managers from their home countries in their foreign subsidiaries’ top positions, while the practice is often criticized as “ethnocentric.” The findings suggest MNCs not only “won’t” globalize their staffing, due to their home country’s cultural tendency to prioritize insiders, but also “can’t” globalize staffing, due to low levels of English language proficiency and long-term employment at their home country, creating hurdles for communication between headquarters and subsidiaries.

Katsuhiko says, “While the practice is widely criticized as ‘ethnocentric’, I have long been wondering if ‘ethnocentrism’ is the only reason for Japanese MNCs assigning many Japanese managers in foreign subsidiaries. My hunch was that indeed, there was an ethnocentric tendency in Japanese society, but there should be other, business-based rationale behind the practice. This study is my answer to this question. Due to long-term employment, managers in Japanese headquarters develop firm-specific knowledge – in other words, taken-for-granted, shared understanding that only applies within the organization – and rely on the knowledge in communication. However, foreign managers at subsidiaries do not always have such knowledge. Due to lack of English language skills, many in Japanese headquarters experience serious challenges in directly communicating with foreign managers at subsidiaries. As a result, Japanese MNCs need to assign Japanese managers, instead of local managers, at key positions of subsidiaries to facilitate communication between headquarters and subsidiaries. Our findings show these contextual constraints are at least equally important as the ‘ethnocentric’ disposition of Japanese culture in explaining the use of Japanese managers at foreign subsidiaries of MNCs from Japan, and the same logic applies to MNCs from other countries, such as South Korea and France.”

“An important implication from this study to management leaders of MNCs from these countries is that they need to reform headquarters if they want to globalize their staffing abroad. Of course, it is important to develop foreign managers in subsidiaries. There is no question about it. However, it is equally important to ‘internationalize’ headquarters and improve the headquarter managers’ ability to communicate beyond borders, encouraging them to go out of their comfort zone of communication based on deeply shared knowledge through Japanese language. Practical steps to move forward includes assigning foreign nationals to headquarters and incorporating English as corporate language.”

Reference to this research:

Lee H-J, Yoshikawa K, Harzing A-W. Cultures and Institutions: Dispositional and contextual explanations for country-of-origin effects in MNC “ethnocentric” staffing practices. Organization Studies. March 2021. doi:10.1177/01708406211006247

Inquiries about this research:

Katsuhiko Yoshikawa, PhD

Associate Professor & Vice President, Shizenkan University

Email: katsuhiko.yoshikawa@shizenkan.ac.jp