Multinational enterprises (MNEs) often deploy parent-country nationals (PCNs) to facilitate and safeguard knowledge transfer from headquarters (HQs) to foreign subsidiaries while using host-country nationals for local adaptation. Yet a simplistic understanding like this may lead to oversimplifications in the context of local-market-seeking subsidiaries. Given the critical boundary spanning role of subsidiary general managers (GMs), we theorize both the transaction cost minimization and value maximization implications of knowledge transfer, exploitation, and adaptation on subsidiary GM staffing decisions. Based on longitudinal data of 557 Japanese manufacturing MNEs between 1991 and 2020 operating across 47 countries, we found that when comparing a focal MNE with itself over time, there is a positive relationship between MNE R&D intensity and PCN GM deployment. This relationship is then moderated by the focal MNE’s international R&D experience. However, when comparing the focal MNE with its peer MNEs, technologically leading firms are less likely to deploy PCN GMs in their local-market-seeking subsidiaries compared to technologically lagging firms.
