Recruitment of local human resources and its effect on foreign subsidiaries in Japan

Purpose This paper aims to investigate three different orientations of recruitment (profession-sensitive, language-sensitive and interculture-sensitive recruitment) and their effect on the foreign subsidiaries of multinational corporations (MNCs). Design/methodology/approach This study examines the relationship among three different orientations of recruitment and knowledge transfer from parent firms to foreign subsidiaries. Data are collected from local managers in MNCs’ subsidiaries operating in Japan using a questionnaire. The hypotheses are tested by using ordinary least squares resression (OLS). Findings The results of this study indicate that each of the three orientations of recruitment positively influences the knowledge transfer of MNCs. In particular, the positive effect of profession-sensitive recruitment is enhanced when foreign subsidiaries are established through acquisition. The positive effect of interculture-sensitive recruitment on knowledge transfer is also strengthened by offering professional training. Research limitations/implications This study is subject to several limitations. The sample size is small, and the data were collected from a single country. In addition, the respondents’ positions in an organizational hierarchy have not been taken into account. Despite these limitations, this study can be considered the first step toward future research on the relationship between different orientations of recruitment and intra-organizational knowledge transfer. Practical implications The results of this study indicate that not only profession-sensitive recruitment but also language-sensitive and interculture-sensitive recruitment are important for intra-organizational knowledge sharing. This study suggests that local employees with intercultural competence have the potential to improve subsidiary performance through knowledge sharing with parent firms if they are provided with professional training. Originality/value This study has empirically examined the complex mechanism of the three important factors (professional, language and intercultural competence) in recruitment and their influence on knowledge transfer. In particular, this study emphasizes language-sensitive recruitment and interculture-sensitive recruitment, which have received less attention than profession-sensitive recruitment in international business research. Moreover, this study focuses on the relationship between recruitment and knowledge sharing in a cross-border setting, which few studies in the human resource management area have examined.