How Hiring Foreign-Born Employees Shapes Global Product Strategy
Results from a new paper. And some exciting updates about the book.
Hello Friends,
Thank you for the outpouring of support after the last post announcing my book. It means a lot more than you might realize. I didn’t understand, until writing my own book, how much trepidation an author feels in telling the world that they’ve written hundreds of pages, hoping somebody might pay attention. Your enthusiasm and positivity has been so reassuring.
Today I want to share two things with you. First, some exciting book-related happenings. Second, the results of a new paper in which my coauthors and I explore the complex issue of how firms can better develop products for international markets.
Book Developments
It’s been an active two weeks since announcing The Truth About Immigration: Why Successful Societies Welcome Newcomers.
First, a not-so-humble brag: the book received a Kirkus *starred* review! When my publicist shared the news, I didn’t understand that it’s actually a big deal. I was happy to see that the words were positive, but I didn’t know what “starred review” was. Apparently, Kirkus Reviews are notoriously harsh. Not getting a bad review is meaningful. Getting positive review is even more so. Getting that star (on the top right of the image) is worth celebrating.
I appeared on a multi-part Freakonomics series on immigration. So far, two episodes have come out. Two more are forthcoming, one this week and one the week after. I’ve been a longtime listener of the podcast. So it was an honor, and a bit uncanny, to spend a lot of time with Stephen Dubner. He’s remarkably smart and really gets social science. All in all, we recorded nearly four hours of material! The episodes are shorter, of course. You can find them here:
The True Story of America’s Supremely Messed-Up Immigration System.
I loved being being placed alongside Leah Boustan in this episode. She’s one of my favorite immigration historians. Her book Streets of Gold (with Ran Abramitzky) is a must-read.
Stay tuned for the final episode in the 3-part series, plus a very fun bonus episode!
I spoke on Studio2, one of Philadelphia’s local NPR shows, about what the best evidence has to say about current immigration events.
All of this has led to an unexpected outcome. The book iscurrently the #1 new release in Emigration & Immigration Studies on Amazon. I know… this is a tiny category in the grand world of nonfiction, it’s still very early before publication, and rankings are fickle. But I’ll take it!
Why Your Company Might Want to Hire Foreign-Born Employees
One of the biggest challenges faced by multinational firms is to come up with relevant products for foreign markets. Consumer tastes and preferences are notoriously nuanced and hard to understand. And they vary a lot due to cultural, legal, and economic differences across countries. (Former students: I’m talking about CAGE).
A recent article in The Guardian shows just how challenging this can be in the world of potato chips. For example, Indonesians like “sweet meaty things” while Filipinos need added vinegar. Japanese consumer love gift giving, so Pringles needs to come up with lots of seasonal products. Koreans are “adventurous” and like to try chips with butter caramel or yogurt flavor (yuck!). In Europe, the British like chips to be sweet and acidic, the Germans like them spicier and drier, and the Spaniards prefer smoky flavors with little vinegar.
Imagine being part of the team charged with figuring all this out, for potato chips or any consumer product. Complicated!
In a new paper with with Dany Bahar and Natalie Carlson, we find that hiring people at HQ from a variety of national backgrounds can help make the task easier. Specifically, we hypothesize that immigrants from country X who work at HQ affect new product launches, updates to existing products, and the attributes of products the firm sells in country X.
We combine two super cool datasets to answer this question: (1) Nearly 75K product launches and updates in 83 countries by 340 US-based CPG firms. (2) Confidential USCIS data on nearly 8,000 H-1B workers hired by those firms in the US. The time period is 2009-2019.
Before telling you about the results, a note on cause and effect. It’s very hard to know if immigrants from country X cause changes in the company’s product strategy in country X, or if the relationship is spurious. For example, maybe the company hired people born in country X because it was already committed to selling more products in country X to begin with. Our empirical design reduces the concern of spuriousness because we focus on a very peculiar type of foreign-born workers: those on H-1B visas. Those visas were assigned by lottery during our time period. So it's nearly impossible for firms to “game the system” to get workers of a specific nationality. (For those who want to get into the nerdy empirical details, the full paper is here.)
So what do we find? After firms hire H-1B workers from country X…
Their products in country X become more locally adapted. The product features and the coloring of the package become more similar to products launched by other firms, in the same category, in that country.
Firms make more frequent updates to products they previously launched in the H-1B workers' home country. We measure that by observing product repackaging (new formulations, new performance claims, etc.). This is especially true if the foreign country is very culturally different from the US.
Contrary to expectations, firms don't launch any more *new* products in the immigrant workers' home country. Except if that country is geographically far from the US.
These effects are driven by products that are very culturally-specific (like food and beverages, which are based on strongly-held local traditions) instead of those with weaker cultural attachments (like household and personal care, whose performance depends more on “scientific” features of the product).
The results are driven by H-1B workers in product-related roles (R&D scientists, product & marketing managers). But not by those in roles unrelated to products (auditors & accountants). This should be the case, of course. After all, accountants don’t work on products directly.
Why are we excited about this study?
It’s perhaps the first systematic analysis providing a really granular look at both the global product choices of multinational firms and the staffing of global product teams at headquarters. The results suggest that the variety of nationalities represented in teams with global product responsibility plays an important role in helping firms understand and adapt to foreign markets. (Former students: remember the adaptation strategy?) It’s one more reason why the circulation of talent across countries is beneficial for firms.
I posted this study on social media a few weeks ago, and it caught the attention of Thomas Otter, who wrote an interesting post on how the results resonated with his experience as a product manager. The study was also profiled by Stuart Anderson in Forbes, where he talks about some of the policy implications of our results.
If you want to read the full paper, you can download it here. A shoutout to Dany and Natalie, who are brilliant and great to work with.
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That’s all for today. I hope you learned something valuable. Thanks for reading and engaging. Your comments are always welcome!
Until next time,
Zeke