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We develop resource- and dynamic capability-based arguments that CEOs with international assignment experience create value for their firms and themselves through their control of a valuable, rare, and inimitable resource. Supporting this view, U.S. multinationals performed better with CEOs with international assignment experience at their helms, especially when such human capital was bundled with other organizational resources and capabilities. Moreover, in highly global firms, CEOs with international assignment experience appropriated a greater proportion of performance in their pay.
The performance of global firms depends on their ability to cope with heterogeneous cultural, institutional, and competitive environments (Ricks, Toyne, & Martinez, 1990), to coordinate geographically dispersed resources (Kim & Mauborgne, 1993; Roth, 1995), and to leverage innovations across national borders (Bartlett & Ghoshal, 1989; Hitt, Hoskisson, & Kim, 1997). Consequently, today's multinational corporations (MNCs) often yield the most complex managerial decision-making environment (Bartlett & Ghoshal, 1992; Sanders & Carpenter, 1998). Such global complexity is likely to make CEOs who have international assignment experience invaluable for many MNCs (Daily, Certo, & Dalton, 2000; Gregersen, Morrison, & Black, 1998; Maruca, 1994). International assignment experience can provide CEOs with inimitable knowledge, worldviews, and professional ties that help them to better manage multinationals' farflung operations (Athanassiou & Nigh, 1999; Lublin, 1996; Maruca, 1994). However, CEOs with international assignment experience are surprisingly rare-- even among MNCs. In the resource-based view, a resource that is apparently valuable, rare, and inimitable can contribute to the competitive advantage of those firms possessing it (Barney, 1992; Coff, 1997; Wernerfelt, 1984). Similarly, such advantage is shaped by "the firm's portfolio of difficult-to-trade knowledge assets" (Teece, Pisano & Shuen, 1997: 509). Therefore, the first purpose of this study was to contribute to the mounting body of research grounded in the resource-based and dynamic capabilities views by empirically testing the prediction that MNCs will perform best when their CEOs have significant international assignment experience.
The resource-based and dynamic capability perspectives also suggest that resources that are intangible, such as those that are socially complex and embedded in human capital, like international assignment experience, are most likely to "generate rents" when they are "bundled" with other resources in a complementary fashion (Barney, 1992; Teece et al., 1997). Indeed, "there is an interaction between the two kinds of resources...