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Competing for digital human capital: The retention effect of digital expertise in MNC subsidiaries


Grimpe, Christoph; Sofka, Wolfgang; Kaiser, Ulrich (2023). Competing for digital human capital: The retention effect of digital expertise in MNC subsidiaries. Journal of International Business Studies, 54(4):657-685.

Abstract

Employees with relevant knowledge and skills for digitalization have become increasingly important for the competitiveness of MNCs. However, the shortage of such digital human capital in many host countries is putting pressure on MNC subsidiaries to prevent these employees from leaving. We theorize that the retention of digital human capital in MNC subsidiaries does not merely depend on salaries but crucially on the learning opportunities that subsidiaries offer. By integrating mechanisms from the literature on subsidiary-specific advantages into theoretical models explaining voluntary mobility constraints of employees, we reason that the opportunities for acquiring new skills in subsidiaries with advanced digital expertise will reduce the odds of losing these valuable employees. We test our theoretical predictions for 11,598 employees with digital human capital working for 866 foreign MNC subsidiaries in Denmark observed between 2002 and 2012. We find that digital expertise helps retaining digital human capital. The effect is stronger if subsidiaries have an internationally diverse workforce and when they possess patented technologies. Both factors provide distinct learning opportunities from digital expertise. The effect is weaker if the subsidiary is located in regional clusters of digital expertise since alternative employers may offer similar learning opportunities.

Abstract

Employees with relevant knowledge and skills for digitalization have become increasingly important for the competitiveness of MNCs. However, the shortage of such digital human capital in many host countries is putting pressure on MNC subsidiaries to prevent these employees from leaving. We theorize that the retention of digital human capital in MNC subsidiaries does not merely depend on salaries but crucially on the learning opportunities that subsidiaries offer. By integrating mechanisms from the literature on subsidiary-specific advantages into theoretical models explaining voluntary mobility constraints of employees, we reason that the opportunities for acquiring new skills in subsidiaries with advanced digital expertise will reduce the odds of losing these valuable employees. We test our theoretical predictions for 11,598 employees with digital human capital working for 866 foreign MNC subsidiaries in Denmark observed between 2002 and 2012. We find that digital expertise helps retaining digital human capital. The effect is stronger if subsidiaries have an internationally diverse workforce and when they possess patented technologies. Both factors provide distinct learning opportunities from digital expertise. The effect is weaker if the subsidiary is located in regional clusters of digital expertise since alternative employers may offer similar learning opportunities.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > General Business, Management and Accounting
Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Strategy and Management
Social Sciences & Humanities > Management of Technology and Innovation
Scope:Learning and pedagogical research
Language:English
Date:1 June 2023
Deposited On:10 Feb 2022 06:56
Last Modified:26 Apr 2024 01:41
Publisher:Springer
ISSN:0047-2506
OA Status:Closed
Publisher DOI:https://doi.org/10.1057/s41267-021-00493-4
Official URL:https://doi.org/10.1057/s41267-021-00493-4
Other Identification Number:merlin-id:22028