General manager succession dynamics in MNE foreign subsidiaries

Abstract

Subsidiary general manager (GM) succession selection is a critical process in multinational enterprises (MNEs). Previous research, grounded in organizational learning and routines, has suggested that GM succession dynamics typically follow either an acceleration or a deceleration momentum. However, as we investigated succession decision-making heuristics through interviews with MNE managers, we observed neither acceleration nor deceleration. Instead, we found some consistent succession dynamics. Within this consistency, we found variations in decision-making models among subsidiaries—some adopting a rule-based approach with a short succession dynamic, some adopting a goal-based approach with a moderate succession dynamic, and others adopting a people-based approach with a long succession dynamic. Underlying these models were bounded rationality, bounded reliability, and their unexpected interactions. Our study sheds light on the critical role of managers in subsidiary management, enriches international business theorizing on the subsidiary GM succession process, and refines the boundary conditions of organizational learning. The central message is that looking solely at GM succession dynamics through an organizational learning lens may risk overlooking relevant causal mechanisms. To make the theorizing on the dynamics of subsidiary management more fertile, the behavioral model should account for the idiosyncrasies of decision-making as well as the heuristics of decision-makers.