Using expatriates to staff key positions in foreign operations is only one option available to MNEs.
What functions do expatriates serve for MNE’s?
Simply the overall purpose of expatriates is about developing social capital for the MNE.
Advantages of expatriates (PCN’s) include, monitoring closer control and harmonization of international operations and providing a wider global perspective. This process gives means that good workers are given international experience. It’s conceived that expatriates are the best people for the job and the subsidiary are more likely to comply with a PNC than a HCN. Disadvantages include high transfer costs and length of time, the possibility of encountering local government restrictions, and possibly that the expatriate will not adapt to the foreign environment as hoped which is a major cause of failure. Also when the expatriate is out there, they have very limited promotion opportunities. Risk is increased as there is a lot of work is done online now and this cause’s potential cultural misunderstanding risk.
Expatriates will always be needed ‘until we have people all over the world with the skills the skills they need, employers are going to have to continue to send expatriates.’(P.88, Dowling, P.J., Festing, M. & Engle, A.D.)). Although a lot of money and time has went into equipping other country with the skills and education their behavior of still sending expatriates to fill key roles shows a lack of trust and believe by the parent country in my opinion, but as its their company they want to ensure that it does not fail, the decision they make will always leave some party/parties disappointed. I believe that the while expatriate business is dying out as firms are replacing many expatriates with HCNs, as it’s cheaper.
Position filling: This where the MNE has a need and they believe using a expatriate as the best alternative to fill it instead of using local sourcing of staff (HCN). This function is the most common reason used by organizations, confirmed by consulting firm GMAC GRS in a global survey in 2002. PWC’s study ‘has revealed that the problem of staff availability has decreased in the last 5 years, now costs of staff are an important driver’ (P.89, Dowling, P.J., Festing, M. & Engle, A.D.)
Management Development: This is where a member of staff can be moved as to help in the development of common corporate values in subsidiary operations, we also see subsidiary workers transferred to headquarters which is to learn and develop so when they return to the subsidiary they will be more educated and attain more ability. As international experience is important for ambitious workers they will have no problem in agreeing to the move. This expatriate will be a vital figure is the company as it may be seen as superior and will need to set an example of what the company as a whole expects as a worker and what the company wants from all.
Organisational development: This is where there is a need for control, so expatriates are sent over to use their knowledge, competence, procedures and practices into play to help management development and exploit global markets. Once again PWC’s report in 2002 comes into play as they spotted out that ‘greater staff mobility assisted the cross-fertilisation of ideas and practices’ (P.89, Dowling, P.J., Festing, M. & Engle, A.D.). All these international assignments are important for globalisation as they allow staff to gain a broader perspective. ‘A study of 64 organisations by CIPD(2001) indicates that sending people on international assignments for management development reasons is as important as the need for filling positions due to lack of local experience. 57.8 per cent of the assignments were supposed to serve the career development goal and 56.3 per cent were initiated because of a lack of qualified HCN’s. However, also organizational and control played an important role...
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