is key to rely on expatriates and they are willing to afford the costs this

Is key to rely on expatriates and they are willing to

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is key to rely on expatriates, and they are willing to afford the costs this involves in the execution stage. Therefore, developing countries face quantity-composition biases when developing a supply of local managers. In addition to the predictions mentioned above, the model bears predictions on the type of firms hiring expatriates with an additional assumption. In particular, result 4 and the following results Result 7: In the execution stage the expatriate secures as much effort from local workers as the local CEO when local inefficiency is low, but less effort when local inefficiency is high. Therefore, expected output is lower under an expatriate manager. Result 12: In the transfer stage, an expatriate CEO will outperform a local CEO. In the execution stage, a local CEO will outperform an expatriate Under the assumption that export oriented firms are more transfer-stage intensive activities while domestic sales oriented firms are more execution intensive activities, the theory predicts that firms hiring expatriates are more likely to be export oriented (while less likely to serve the domestic local market). The mechanism behind this result is that expatriates are particularly valuable for the transfer of technology, while disadvantaged when dealing with local conditions. Consequently, firms whose transfer-stage is a more important input than the execution stage will find it more valuable to hire an expatriate. This shows that not all the performance measures of plants are positively correlated with expatriates. While the model highlights the benefits from hiring an expatriate it also makes explicit its costs, which differentiates itself from a simple alternative productivity-driven story that more productive firms employ expatriates and at the same time excel in every measure. 30
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5 Additional Empirical Results 5.1 Data The source of information is the Encuesta Sobre Investigaci´ on y Desarrollo de Tecnolog´ ıa (ES- IDET) [Survey on Research and Development of Technology]. This is a confidential survey carried out by the Instituto Nacional de Estad´ ısticas, Geograf´ ıa (INEGI) [National Institute of Statis- tics and Geography] of Mexico for the Consejo Nacional de Ciencia y Tecnolog´ ıa (CONACYT) [National Council of Science and Technology]. It has surveys for three sectors: production, edu- cation, and government. We will use the data for production, which includes both manufacturing and service sectors. The survey contains information on several aspects of innovative activities: expenditures, human resources and collaborating firms and institutions. It includes information on expenditures for each type of R&D: product R&D and process R&D. We use the 2002 sur- veys. 40 Each survey elicits information for the previous two years, but for this paper we focus on the cross-sectional variation and report the result for 2000.
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