Impact of Staff Localization on Turnover: The Role of a Foreign Subsidiary CEO

Abstract

Great resignation has become a critical issue in management discipline and retaining talents is one of the most important properties across the globe. Among them, local staff have been regarded as an essential competitive advantage for multinational companies and their sustainability. In this sense, staff localization has received considerable attention from scholars and professionals; however, few studies have examined the mechanisms underlying the relationship between staff localization and turnover. This study examines the macro-level relationship between the ratio of local staff in a subsidiary and the actual turnover rate of 89 multinational companies in 25 countries through their headquarters and subsidiary staff. Additionally, the aim of this study was to identify the moderating impact of a CEO’s nationality. The results showed that local staff leave organizations in which there are more expatriates deployed from HQs. Furthermore, the CEO’s nationality buffered the relationship between staff localization and the local staff turnover. This study can contribute to the academia and practice by revealing the effect of staff localization on staff turnover. In addition, a CEO staffing strategy focusing on nationality can be considered an important factor in retaining competitive local staff during the COVID-19 pandemic for multinational companies.

Keywords

• staff localization
• turnover
• subsidiary CEO
• psychological contract
• South Korean MNCs