Expatriates and Corporate Level

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The current issue and full text archive of this journal is available at www.emeraldinsight.com/0025-1747.htm

MD 45,3

Expatriates and corporate-level international strategy: governing with the knowledge contract Brian Connelly and Michael A. Hitt
Texas A&M University, College Station, Texas, USA

564

Angelo S. DeNisi
Freeman School of Business, Tulane University, New Orleans, Louisiana, USA, and

R. Duane Ireland
Texas A&M University, College Station, Texas, USA
Abstract
Purpose – This paper proposes a methodology for governing expatriate assignments in the context of corporate-level objectives. Design/methodology/approach – The approach taken is to envisage expatriate managerial assignments within the theoretical framework of agency theory and the knowledge-based view of the firm. The paper begins with the view that knowledge acquisition and integration is a primary goal for most expatriate assignments. The relationship between expatriate managers and multinational corporation (MNC) headquarters from an agency perspective are considered and the notion of a “knowledge contract” as a means of governing that relationship is discussed. Four corporate-level international strategies available to MNCs (global, international, transnational, and multidomestic) are then examined and the extent of agency problems under each strategy is discussed. Findings – The paper makes specific predictions about the type of knowledge contract that is most likely to address agency problems for each corporate strategy. Originality/value – This research extends agency theory by introducing the knowledge contract as a means of managing agency concerns. This offers a broader range of contract alternatives, moving researchers beyond traditional agency theoretic prescriptions. The research also contributes to the literature on expatriate management by integrating assignment success with research on corporate-level international strategy. Few authors have recognized organizational strategy as an important unit of study in international human resource management. Doing so, however, has yielded a unique set of contingency relationships that would otherwise be obscured. Keywords Expatriates, International business, Corporate strategy, Knowledge management Paper type Conceptual paper

Management Decision Vol. 45 No. 3, 2007 pp. 564-581 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251740710745016

Introduction Multinational corporations (MNCs) invest more in a single expatriate manager than perhaps any individual in the organization other than the chief executive officer (CEO) (Selmer, 2001). In spite of this, organizations rarely consider expatriate assignments from a strategic perspective. One indicator of this problem is the lack of consensus regarding how to gauge the success of these assignments. In fact, scholars have considered different measures of success at different levels of analysis, and these indicators are often inconsistent with one another (Edmond, 2002). For example, some scholars have considered success at the level of the subsidiary, and suggested that it is primarily a function of financial objectives such as growth and profitability (Fey and Bjorkman,

Electronic copy available at: http://ssrn.com/abstract=1374694

2001). Others have considered success at the level of the individual employee (Tung, 1987), suggesting that successful assignments are those that do not end prematurely (Hogan and Goodson, 1990). These indices of success are inconsistent, increasing the difficulty of relating them to success considered at the level of the organization. A primary goal of this work is to consider how MNCs can govern expatriate managers in view of corporate-level objectives. We believe that our conceptualization of these processes offers a more comprehensive measure of expatriate success. To accomplish our research objective, we first discuss how expatriate managers can contribute to the competitive advantage of...
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