EXPATRIATES AS INSTRUMENT IN INTERNATIONAL MANAGEMENT
EXPATRIATES AS INSTRUMENT IN INTERNATIONAL MANAGEMENT
EXPATRIATES AS INSTRUMENT IN INTERNATIONAL MANAGEMENT
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Cartes-fiches
Expatriate
Definition
Someone sent abroad by their company
Why are expatriates important?
• Important mechanism to coordinate the international activities of an MNC…
• …to create coherence in the company…
• …create a common understanding and common culture.
Three Staffing options for subsidiaries
- 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
Ethnocentric staffing model
- PCNs (Parent-Country) for higher-level foreign positions
- Expat PCNs most effective representing HQ views
Polycentric staffing model
- 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
Geocentric staffing model
Hire the best person available, regardless of where that individual comes from
Objectives of Expatriates (5)
- Supporting subsidiary operations
- Coordination mechanism
- Knowledge Transfer
- Incentive in the career path of executives
- Development of manager
Necessary Skills and Abilities for Expatriates to do the job and to work in a Foreign Location
- Job:
- Technical
- Functional
- Managerial
- Location:
- Adaptability (Tolerance for ambiguity, Tolerate multiple perspectives)
- Location-specific skills
- Personal characteristics
Other Success Factors of expatriate assignment
- 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
What is the consequence of high expats costs?
- 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)
Four different phases of in Acculturation
- Honeymoon
- Culture Shock
- Adaption
- Stability
What could culture shock lead to?
- May lead to feelings of fear, helplessness, irritability, and disorientation
Compensation packages for expatriates
- 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
Types of training programms
- 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
Social learning theory
People learn by observing others
What are possible reasons for repatriation?
• Predetermined time is up
• Desire to have children educated in home country
• Unhappy overseas
• Cost of expatriate too high
• Poor performance / failure
What is the primary cause of expatriation failure?
- Inability of the managers and/or their spouse and family to adjust to the new locale
Potential reason for reverse culture shock
- 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
