Talent Management in Foreign Subsidiaries: A Review and Roadmap
The strategic importance of talent management in multinational corporations and future research directions
1The Role of Human Capital in Foreign Subsidiaries
Foreign subsidiaries of multinational corporations must adapt their human capital resources to specific needs. Talent serves as the micro-level foundation of subsidiaries' organizational-level human capital resources and strategic outcomes. Research in this area over the past two decades has been fragmented and lacks a comprehensive perspective. This paper aims to synthesize existing literature to identify what is known, what remains unknown, and future research directions.
2A New Approach to Talent Classification
Existing classifications have been expanded by integrating the distinction between headquarters-assigned or locally hired talent with talent nationality. This structured perspective better reflects the realities of subsidiary talent. For example, headquarters-assigned talent often disseminates company culture, while local talent enhances market knowledge. This distinction can help subsidiaries optimize their human capital strategies.
3From Individual Competencies to Organizational Resources
Talents' individual knowledge, skills, abilities, and other characteristics (KSAOs) and social interactions evolve into four subsidiary-level human capital resources. These resources contribute to strategic outcomes. For instance, technical skills boost innovation, while social skills enhance team cohesion. Understanding this process is critical for comprehending how human capital emerges.
4Human Capital Resources at Subsidiary Level
Research identifies four main types of human capital resources at the subsidiary level: technical, social, cultural, and strategic. Each resource type affects subsidiary performance differently. For example, technical resources increase efficiency, while cultural resources strengthen alignment. A balanced distribution of these resources is vital for long-term success.
5Impacts on Strategic Outcomes
Talent management plays a critical role in subsidiaries gaining competitive advantage. Well-managed talents lead to strategic outcomes such as innovation, customer satisfaction, and market share growth. For instance, multinational tech companies maintain global market leadership through effective talent management. These impacts are directly observable in performance metrics.
6Gaps in Current Research
Current literature does not holistically address the impacts of talent management at the subsidiary level. Differences across industries and geographies are under-researched. Additionally, the effects of digital transformation on talent management are not fully understood. These gaps present significant opportunities for future research.
7Future Research Directions
Future research should focus on areas such as the interaction between talent management and digital transformation, and the effects of cultural differences. For example, the impact of AI-powered talent management systems on subsidiary performance remains unexplored. Talent strategies in emerging markets may also differ from those in developed countries.
8Conclusions and Recommendations
This paper highlights the strategic importance of talent management in foreign subsidiaries of multinational corporations. Subsidiaries can gain competitive advantage by optimizing human capital resources. Future research can further enhance this advantage by focusing on new areas like digital transformation and cultural adaptation. These findings serve as a valuable guide for both academics and practitioners.