Why Organizations Use Expatriates

Pages: 8 (2327 words) Published: May 21, 2013
Why do organizations use Expatriates?
Expatriates were used as a means of addressing agency issues as a result of the separation of ownership and management and their amplification through distance.

Edstrom and Gailbraith (1977) proposed three motives for using expatriates. Firstly, as position fillers when suitably qualified host country nationals (HCNs) were not available. Secondly, as a means of management development, aimed at developing the competence of the individual manager. Thirdly, as a means of organisational development, aimed at increasing knowledge transfer within the MNC and modifying and sustaining organizational structure and decision processes. Although it is important to note that assignments generally have more than one rationale (Sparrow et al., 2004)

More recently, Harzing (2001) identified three control specific roles of expatriates, namely: the bear, the bumble-bee, and the spider. Bears act as a means of replacing the centralisation of decision-making in MNC and provide a direct means of surveillance over subsidiary operations. The title highlights the degree of dominance these assignees have over subsidiary operations. Bumble bees fly “‘from plant to plant’ and create cross-pollination between the various offshoots” (Harzing, 2001: 369). These expatriates can be used to control subsidiaries through socialisation of host employees and the development of informal communication networks. Finally spiders, as the name suggests control through the weaving of informal communication networks within the MNC

There is a growing debate as to the continued utility and viability of the conventional expatriate assignment. 5 key aspects of this issue: supply side issues*, demand side issues*, expatriate performance and expatriate failure, performance evaluation, and finally costs and career dynamics.

Supply side
There is growing recognition that shortages of international managers are a significant problem for international firms and frequently constrain the implementation of global strategies in these firms (Evans et al, 2002) Broadly these issues can be grouped as issues concerning the recruitment and retention of potential expatriate employees.

Issues related to recruitment and potential expatriate employees There is some evidence to suggest that families are less willing to accept the disruption of personal and social lives associated with international assignments than was the case in the past (Forster, 2000).

The most recent available data suggest that the female expatriate population has not risen significantly over the past decade and remains at approximately 10 per cent however (PriceWaterhouseCoopers, 2005). Recent research conducted on the outcome of women’s global assignments has indicated that female expatriates are generally successful in their global assignments.

Issues related to retention of expatriate employees
There is growing recognition that companies deal unsympathetically with the problems faced by expatriates on re-entry------ reluctant to accept int. assignments North American research indicates that 20 per cent of all managers who complete foreign assignments wish to leave their company on return. Yet, while it is generally accepted that retention of expatriates is a growing problem and that the costs of expatriate turnover are considerable (Dowling and Welch, 2004), many international firms have failed to develop repatriation policies or programmes designed to assist the career progression of the expatriate (Black et al 2000)

There is little evidence to suggest that many companies practice talent management in a co-ordinated and efficient way (Cohn et al, 2005), Which may be defined as approaches to recruit, retain, develop and motivate a competent cohort of managerial talent with appropriate international experience in the global business environment. Evans et al (2002) “MNCs are unaware of where their best talent is located and have difficulties in...
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