Recruitment and Training Strategies of US and German Subsidiaries Abroad - Evidence from Switzerland

There is still an ongoing debate in the literature about the influence of headquarters on their subsidiaries located abroad. Using Swiss establishment-level data, we investigate the importance of alternative human resource (HR) strategies for US and German subsidiaries of multinational companies (MNCs) compared to domestic firms. Our results show that US subsidiaries find it more important to recruit university graduates and dropouts, whereas German subsidiaries find it more important to recruit skilled workers with a vocational qualification from the external labor markets. However, while (small) foreign subsidiaries are less likely to assign a high importance on dual apprenticeship training compared to domestic firms, we do not find statistically significant differences between US and German subsidiaries. Nonetheless, both domestic firms and foreign subsidiaries assign a higher importance of apprenticeship training when they find it difficult to find suitable skilled workers on the external labor market. Our findings suggest that HR strategies depend on a number of different factors, including the labor market environment, and a firm’s wage policy, and other firm characteristics such as competitiveness, innovation, and the efficiency of production processes.