Factors affecting the change of top executive nationality in MNCs’ foreign affiliates in Japan

Using archival data published in 2003 and 2007, we investigated factors that influence the change of nationality of the most senior executives in foreign affiliates of MNCs operating in Japan. Our results show that as the length of operation in Japan increased, the likelihood of a non-Japanese top executive in the affiliate being replaced by a Japanese one, was higher than that of a Japanese top executive being replaced by a non-Japanese one. We also found that when an affiliate had a Japanese top executive at time one, it was more likely that a non-Japanese executive replaced the Japanese one if the affiliate’s foreign ownership ratio increased at time two. In addition, there were notable differences between affiliates of Asian, North American and European MNCs in top executive staffing patterns of Japanese affiliates. Implications from this study and future research directions are discussed herein.