Internal Seminar: Zijun Cheng

Managing Multinational Expansion: Home-Country Managers and the Scope of Foreign Networks 

Why do some multinational business groups keep extending their foreign networks while others stall? This paper argues that part of the answer lies at home: integrating and monitoring foreign affiliates draws on a quasi-fixed stock of home-country managers. Their firm-specific knowledge cannot be hired and deployed instantly. This creates a Penrose constraint on multinational scope. I link annual ownership networks of French business groups from LiFi and Historical Orbis for 2008–2018 to employer-employee records, firm accounts, and customs data. Larger inherited foreign portfolios are associated with more manager hours, managers, and managerial pay in France. Opening a new country also has a larger managerial requirement than deepening an existing one. Prior trade links and gravity organize where groups expand, but they do not measure the managers available to implement expansion. I develop a dynamic model in which productivity raises the return to foreign opportunities. The inherited manager stock lowers integration congestion, while new managers take time to build. The model predicts that inherited managers matter most for communication-intensive destinations. A single structural elasticity governs how the manager stock limits network scope.

Tuesday, November 3rd, 2026, from 12:00 to 1:00 p.m.

Room A406