Local air pollution reduces expatriate deployment

What the study found: Local air pollution is associated with lower expatriate deployment in multinational enterprises’ international subsidiaries. The abstract also reports that this negative relationship depends on the multinational enterprise’s local experience and local talent supply, and may be influenced by industry pollution levels.
Why the authors say this matters: The authors conclude that the study adds to research on the microfoundations of internalization theory by including bounded reliability, meaning the limits of trustworthiness in contractual interactions between expatriates and multinational enterprises. They also say it contributes to expatriate management research by showing effects of local air pollution, part of the natural environment, on expatriates and multinational enterprise governance.
What the researchers tested: The researchers first interviewed current and former expatriates to understand how local air pollution shapes attitudes and staffing decisions. They then tested hypotheses using archival data from Japanese multinational enterprises’ subsidiaries in Chinese cities, and used a meteorology-based instrumental variable to reduce potential endogeneity problems.
What worked and what didn't: The interviews suggested that expatriates see local air pollution as a severe stressor and that it reduces their commitment to international assignments. In the quantitative analysis, local air pollution significantly reduced expatriate deployment, while the relationship varied with local experience, local talent supply, and possibly industry pollution levels.
What to keep in mind: The abstract does not provide detailed limitations beyond noting the use of an instrumental-variable design to address endogeneity concerns. The study is based on Japanese multinational enterprises in Chinese cities, so the stated findings come from that context.

Key points

• Local air pollution is reported to significantly reduce expatriate deployment.
• Interviews found that expatriates viewed local air pollution as a severe stressor.
• The negative relationship was said to depend on local experience and local talent supply.
• Industry pollution levels may also influence the relationship.
• The study used interviews and archival data from Japanese MNE subsidiaries in Chinese cities.