Published and Accepted Papers

Immigrants and Foreign Firm Performance
​Hernandez E., Kulchina E.
Organization Science, forthcoming

Studies have demonstrated that foreign firms locate where immigrants from their home countries reside and suggested that doing so can improve performance. We argue that, to properly assess how immigrants impact the performance of co-national firms, research must account for heterogeneity in how independent foreign entrants (owned by individual foreigners) versus MNC subsidiaries (owned by a foreign corporate parent) benefit from immigrant communities. Independent entrants have a greater need for resources from the immigrant community and depend more on their individual managers’ personal connections within the community to obtain such resources. Subsidiaries of MNCs can instead rely on the impersonal organizational resources of their parent firm (e.g. brand, reputation, channels) to access valuable immigrant community resources. Using data on foreign firms in Russia during 2006-2011, we find that immigrants improve the profitability of co-national independent firms only if they are managed by immigrant CEOs, whereas co-national MNC subsidiaries profit from immigrants regardless of their CEO’s nationality. Our study suggests that while organizations benefit from the resources of co-national immigrant communities in foreign markets, the means by which they activate them—personal or impersonal—systematically vary across different types of firms.​

Keywords: Immigrants, Multinational Corporation (MNC), Immigrant Entrepreneur, Foreign Subsidiary, Immigrant CEO, Domestic CEO, Embeddedness, Firm Performance

Relational Contracts and Managerial Delegation: Evidence from Foreign Entrepreneurs in Russia
Kulchina E., Oxley J.E.
Organization Science, forthcoming

We examine the managerial delegation decisions of foreign entrepreneurs, and assess how these decisions are shaped by characteristics of the local product and labor market environment. We argue that actual or perceived home bias in court proceedings leads foreign entrepreneurs to place little reliance on formal contracts in their dealings with local agent managers. Adopting the lens of relational contract theory, we develop hypotheses linking managerial delegation decisions to market conditions associated with stable self-enforcing agreements, and test the hypotheses in the context of post-Soviet Russia. Consistent with our arguments we find that foreign entrepreneurs are more likely to hire an agent manager in local markets where industry growth creates a substantial ‘shadow of the future,’ where managers’ outside employment options are relatively limited, and where competition and the variability of returns are not so high as to induce defection from an informal agreement. Similar observations on a sample of Russian-owned entrepreneurial firms suggest that these delegation decisions are relatively insensitive to local market conditions, but are influenced by the density of local reputation networks. Our study thus contributes to understanding of the distinctive features of foreign entrepreneurs’ managerial delegation decisions, and reinforces the view that contracting impediments constitute one important aspect of the ‘liability of foreignness’ for entrepreneurial firms.​

Keywords: relational contracts, entrepreneurs, managers, agents, agency problems

Do foreign entrepreneurs benefit their firms as managers?
Kulchina E.
Strategic Management Journal, 38:1588-1607 (2017)

The entrepreneurship literature has extensively studied an individual’s decision to found a new venture, but it has little to say about the individual’s choice to operate this venture personally or hire an agent. This decision is particularly challenging for foreign entrepreneurs, who, in addition to traditional factors, such as agency costs and personal preferences, need to take into consideration the benefits and liabilities of foreignness. Using novel data on foreign entrepreneurial firms and instrumenting for the owner-manager choice with a visa policy change, we find that managing foreign entrepreneurs significantly improve firm performance. Our results further suggest that foreign owner-managers reduce operating costs but have no effect on the firm’s productivity and growth.

Keywords: choice of manager, immigrant entrepreneurs, firm performance, owner-manager, founder-CEO

Personal Preferences, entrepreneurs' location choices and firm performance
Kulchina E.
Management Science, 62(6): 1814-1829 (2016)

While early location work established the role of economic factors in entrepreneurs’ location choices, recent studies suggest personal reasons as another factor. However, since the places where entrepreneurs want to live are often the places where they will likely do well, it is difficult to empirically separate the two mechanisms. We focus on entrepreneurs founding firms abroad, allowing us to more effectively isolate the effect of personal location attractiveness. We leverage entrepreneurs’ decisions to relocate and manage their firms personally or to remain in a home country and hire a manager. We find that entrepreneurs who view a host country as an attractive location are more likely to relocate and manage their firms personally. However, such entrepreneur-managers have lower firm performance. These results are consistent with the idea that entrepreneurs are more likely to locate in personally attractive places and are willing to substitute benefits of living there for some firm profit.

Keywords: location choice, location attractiveness, nonpecuniary benefits, foreign entrepreneurs, owner-manager

A path to value creation for foreign entrepreneurs
Kulchina E.
Strategic Management Journal, 37: 1240-1262 (2016)

Firms founded by foreign entrepreneurs constitute an influential and growing part of the world economy. Yet the existing research has given little consideration to the strategies of foreign entrepreneurs beyond their decisions to start a firm. In this paper, we address this gap by examining how foreign entrepreneurs may bring value to their firms as firm managers. We argue that foreign owner-managers may benefit their firms by having access to home-country resources. We demonstrate that, compared to hired local managers, foreign owner-managers reduce firms’ operating costs by disproportionately hiring home-country labor when this labor is more cost-efficient. This effect is larger for labor-intensive industries and for entrepreneurs from less wealthy countries.

Keywords: foreign entrepreneurs, firm performance, owner-manager, labor cost, hiring strategy

Media coverage and location choice
Kulchina E.
Strategic Management Journal, 35(4): 596-605 (2014)

Emphasizing the importance of informed location choice, prior strategy research has examined how private information about locations affects foreign direct investment. Publicly available media information has received little attention, however, perhaps because its impact on location choice is expected to be trivial. This study examines the relationship between the extent of a location’s media coverage and the number of entering foreign firms in Russia, using a novel instrumental variable for media coverage, a major anniversary of a city’s establishment date. The results suggest that extensive foreign media coverage of a city increases the number of foreign entrants. This effect is stronger for firms with less private information about Russian cities, i.e., more socially and geographically distant firms and foreign entrepreneurs.

Keywords: foreign entry, location search, public information, media information, foreign direct investment