EXPATRIATES AS INSTRUMENT IN INTERNATIONAL MANAGEMENT

• Important mechanism to coordinate the international activities of an MNC…
• …to create coherence in the company…
• …create a common understanding and common culture.

• Parent country nationals (PCNs) -->EXPATRIATE
  • Residents of the international business’s home country
• Host country nationals (HCNs)
  • Residents of the host country
• Third-country nationals (TCNs) -->EXPATRIATE
  • Not citizens of the firm’s home or host country

• PCNs (Parent-Country) for higher-level foreign positions
• Expat PCNs most effective representing HQ views

• HCNs know the local market best
• Fewer cultural problems
• Less expensive than ethnocentric

But:

• limited opportunity to gain experience
• gap can form between host country managers and parent country managers

Hire the best person available, regardless of where that individual comes from

• Supporting subsidiary operations
• Coordination mechanism
• Knowledge Transfer
• Incentive in the career path of executives
• Development of manager

• Job:
  • Technical
  • Functional
  • Managerial
• Location:
  • Adaptability (Tolerance for ambiguity, Tolerate multiple perspectives)
  • Location-specific skills
  • Personal characteristics

• Can freely choose to accept or reject the assignment
• Have a realistic preview of the assignment
• Have a realistic expectation of repatriation assignment
• pre-departure training

• short trips
• Paying expatriate wages only for a limited time, then adjust to host-country payment
• Dropping bonuses or premiums for overseas assignments and replacing them with lump-sum premiums (Pauschale)

1. Honeymoon
2. Culture Shock
3. Adaption
4. Stability

• May lead to feelings of fear, helplessness, irritability, and disorientation

• Cost-of-living allowance (Relocation cost, rental)
• Tax equalisation system (Potential tax consequences)
• Hardship premium
• Legal environment (Visa)
• Expatriates earning more than host-country nationals
• Expatriates out of sight of top-management at HQ

• Environmental briefings
• Cultural “orientation”
• Cultural assimilators
• Sensitivity training
• Field experience
• Language training

goals-->

• Mentally prepare expat (and family) for the move
• Remove some of the “unknown”
• Provide opportunity to ask questions to reduce anxiety

People learn by observing others

• Predetermined time is up
• Desire to have children educated in home country
• Unhappy overseas
• Cost of expatriate too high
• Poor performance / failure

• Inability of the managers and/or their spouse and family to adjust to the new locale

• Home office job lacks the high degree of authority and responsibility that expatriates had overseas
• Impression that the company does not value international experience
• Loss of connection to HQ employees
• Potential change or elimination of old job; no adequate positions
• Worsening of financial situation