Remote control of foreign subsidiaries: a transaction cost analysis of virtual expatriation
by Dirk Holtbrügge; Katrin Schillo
European J. of International Management (EJIM), Vol. 7, No. 6, 2013

Abstract: Virtual expatriations are characterised by the spatial and psychic separation of private and professional life. While virtual expatriates are physically located at the headquarters, from an organisational and operational point of view, they belong to the foreign subsidiary. In this study, the use of virtual expatriations as a control mechanism in MNCs is analysed. Based on transaction cost theory, three research hypotheses are developed and tested on 172 MNCs in the BRICS countries (Brazil, Russia, India, China, and South Africa). The study shows that the frequency of interactions between the headquarters and subsidiary, as well as the asset specificity of the latter, has a significant influence on the use of virtual expatriation. On the contrary, this instrument of remote control of foreign subsidiaries is not affected by the uncertainty of transactions.

Online publication date: Wed, 10-Sep-2014

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