Zoom link: https://aarhusuniversity.zoom.us/j/6718045790

On 22 February at 10:00 via Zoom, Yulia Muratova will give a seminar entitled

What’s in the Name? Government Inspections of MNC Subsidiaries in Host Markets and CEO Foreignness

Abstract
Subsidiaries of multinational corporations (MNCs) use a large proportion of time to interact with the host government through government inspections, such as workplace compliance with local tax or safety regulations. These inspections can have multiple adverse effects on business operations. This study examines how local government officials select MNCs as inspection targets. Drawing on the institutional theory and expatriation literature, we argue that MNC subsidiaries run by foreign CEOs, as opposed to local, are more likely to be targeted for inspections because they are perceived as potentially less compliant with local institutions. We further propose two contingency factors – cultural diversity in the host location and government validation – that attenuate the association between CEO foreignness and the number of inspections. We test our hypotheses on a sample of 2,259 foreign subsidiaries that operated in Russia between 2015 and 2018 and provide evidence consistent with the idea that government inspectors discriminate against foreign CEOs. Our study contributes to research on social judgments, the liability of foreignness, business-government relationships, and CEO staffing.