19 Table 1 shows that plants with at 17 We explain the data in Section 5 18 The

# 19 table 1 shows that plants with at 17 we explain

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19 Table 1 shows that plants with at 17 We explain the data in Section 5. 18 The choice of this threshold does not affect the qualitative results in this paper. 19 As the analysis of German plants in Mexico in Carrillo and Hinojoza (1999) shows, this is a realistic assumption: “The presence of Germans based in Mexico represents less than 1% of total employment. Yet, in their majority they hold managing positions”.(translated from the text) 7
Table 2: R&D Intensity of Mexican Subsidiaries of Multinational Firms Plants with Plants with Total no foreign employees foreign employees Dummy (1 if R & D > 0) 0.2 0.16 0.18 (0.03) (0.03) (0.02) Total R & D 2576.56 5492.13 3930.22 (914.36) (2755.95) (1370.12) Log of total R & D 7.85* 8.77* 8.23 (0.33) (0.37) (0.25) Total R & D /Sales (%) 0.18* 0.38* 0.27 (0.04) (0.10) (0.05) Number 209 182 391 Notes: The table reports summary statistics of R&D variables. The first column is the statistics for plants without any foreign employee, while the second with at least one foreign employee, and the third for all plants pooled together. Standard deviation of the means in parentheses. R&D expenditure is in nominal thousand pesos (A dollar was 9.5 pesos in the beginning of 2000). Significance of the test of the equality of the mean of the two groups: * 10 percent, ** 5 percent, *** 1 percent. least one foreign employee have a statistically significantly higher likelihood of spending a positive amount in technology transfer from abroad. The amount of the expenditure as well as the ratio of the expenditure on total sales are also statistically significantly higher for plants with at least one foreign employee than for plants with no foreign employee. The comparison of the log of the expenditure suggests that, conditional on spending a positive amount of expenditure, there is no difference of the amount of expenditures between the two types of plants. The fact that technology transfer from abroad is higher for plants with expatriates may not be surprising if expatriates are substitute of local R & D . However, plants with expatriates are also spending higher amounts on R & D . Table 2 presents summary statistics of R & D expenditure for Mexican subsidiaries of MNCs. Table 2 shows that there is no statistically significant difference of the likelihood of engaging R & D between the two types of the plants. However, conditional on engaging R & D , the R & D expenditure is statistically significantly higher for plants with at least one foreign employee than plants with no foreign employee. These together show that foreign plants with expatriates are engaged in more technology-intensive activities both in terms of technology transfer from abroad and local R & D . 8
3 A Theory of Multinational Expatriates: Leadership meets Cul- ture We present an information based leadership theory of multinational expatriates. 20 The model studies whether the Headquarter (HQ) appoints an expatriate or a local CEO in the subsidiary where the company may expand. The key idea of the model is that the appointment of the CEO will determine the extent of information asymmetries between the HQ, the CEO and local workers. In particular, we assume that only the HQ and the subsidiary CEO, if he is an expatriate,

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• Spring '17
• JAMES FENSKE

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