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Chapter: Business Science - International Business Management - Production, Marketing, Financial and Human Resource Management of Global Business

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Selection of expatriate managers

There is no set definition and usage varies with context, for example the same person may be seen as an "expatriate" by their home country and a "migrant worker" where they work. Retirement abroad, in contrast, usually makes one an "expatriate".

SELECTION OF EXPATRIATE MANAGERS:

 

An expatriate (often shortened to expat) is a person temporarily or permanently residing in a country other than that of the person's upbringing. The word comes from the Latin terms ex ("out of") and patria ("country, fatherland"). In common usage, the term is often used in the context of professionals or skilled workers sent abroad by their companies, rather than for all 'immigrants' or 'migrant workers'. The differentiation found in common usage usually comes down to socio-economic factors, so skilled professionals working in another country are described as expatriates, whereas a manual laborer who has moved to another country to earn more money might be labeled an 'immigrant' or 'migrant worker'.

 

There is no set definition and usage varies with context, for example the same person may be seen as an "expatriate" by their home country and a "migrant worker" where they work. Retirement abroad, in contrast, usually makes one an "expatriate".

 

ROLE OF EXPATRIATE MANAGERS:

 

The specific role of expatriate managers, and their distinct contribution to TNCs, may be understood in relation to the gap they are considered competent to fill at a particular location in the division of labor in a given geography. The participants were asked to define such a role, identifying why it could not be filled by a local or a third country national.

 

Although a wide range of differing reasons and circumstances might necessitate the use of expatriate managers, an understanding that these managers carry special skills is explicit in both the literature on the subject and in all the respondents’ accounts. The following are some typical examples. In a lot of emerging markets, where we are mostly engaged in joint venture, the partner company provides country access, markets and we supply technology and management skills. The big things here are technical expertise and management skills.

 

Our partners know how to build and operate a company using 35,000 local workers. They do not have any indigenous high quality technologists. So what they want from us is technology. We give them that in return for presence and access to market. Secondly, they want to know how to form and operate a company to modern international standards.

 

My skill is to run that factory with 4000 people. That is the skill that the locals do not have. They need a small number of expats, people from the Centre, from the UK who know how to run things. We are going in there to help them develop those skills. (General manger of oil TNC, joint venture, China) I think one aspect is technical skills. Let’s say you need a Vietnamese Financial Director. That will be an impossible situation. His technical skills would be quite move up to the job. Based on my experience in Vietnam, one primary purpose of my work is to move technology from one country, one business to another. Secondly, it knows how the business works. You get a local in a senior position; it will be tough for him to understand how the business functions. (Senior strategist of a food TNC)

 

One primary reason for expatriation is skill shortages, particularly in markets where there may be no concept of commercialization. Our longer-term strategy is to grow through alliances. Expatriates prepare and develop the locals via ideological spread. (Human resource manager of an airliner) The expat needs two basic skills: one is technical knowledge and expertise, and the other is general business know-how.

 

We do not use international assignments to train young lads at this level. If the business is going to be a world class business, it has to be run along our lines; it has to be a recognizable factory, anywhere in the world.

 

We will train local workforces to our standards, and by our methods. So as far as we are concerned, it is an extension of our way of doing things. Obviously by putting in an expat, you are importing someone who has up-to-date knowledge of the 9 business, which you cannot get by hiring somebody locally, although it will cost very much more. (Head of international manufacturing of a motor vehicle and parts TNC)

 

What seems clear from these accounts is that expatriate managers need specific skills that incorporate product and market-related competence as well as a sound understanding of corporate culture and the corporations’ ways of doing business in a global market. The two aspects need separate consideration in order to gain a more detailed understanding of reasons for the importance of expatriates to globalization strategies as well as their potential substitution by factors such as technology and/or host country nationals.

 

Managerial expertise defined the part of the paper reflects an attempt to establish more clearly how TNCs define global management skill and expertise. The managers were asked to specify key components of managerial know-how, the expertise that could be distinguished from technical skills.

 

The participants offer the following explanations:

 

These skills are exactly about corporate values and culture. They are about knowing how the business works. We have just acquired a statement about corporate purpose. So before this expats’ role was absolutely vital in communicating the unspoken (senior strategist of a food TNC)

 

These have to do with our core values, which are the rules wherever you are.

 

When senior company people are put in charge, they become its face. We are a global company, and it is these values that matter a great deal to us.

 

When we are criticized in a locality, we need sharp people who know these rules and can put things right. If we accept to work with local rules, there are places where we will never do any business. You have to have the skill to adapt these rules to your values and, if need be, to Changed, to shape the agenda. (General Manager of an oil company- joint venture, China)

 

We would normally use our experienced managers, who have the necessary experience. We are happy to flavor our production locally, but our senior expats must be able to apply our core alues to day to day decision making. A successful expat is one that combines technical expertise with our core values. (Head of international manufacturing of a motor vehicle TNC) We are a global company, with a set of values, which ensure that we are ultimately the best in the market. These are very important to all our people. They are things like honesty, responsibility and openness.

 

There are certain geographies which we do not trust, there we prefer neutral Britons to locals. In these examples, the managers describe the specific expertise required in an expatriate as being the ability to utilize their corporations’ core values and philosophies in managing global operations and in shaping the local agenda. The corporate values are seen as a guideline that ensures cohesion between the core and the other geography. The expatriate manager is trusted to be “honest” and “responsible”, attributes which the airliner HR manager believes might be rare in certain geographies. The issue of creating consistency in organizational belief systems, particularly in acquisitions, comes up regularly in the managers’ accounts.

 

The expatriate manager is trusted to ensure that the core values of the parent TNC are12 understood and upheld by the workforces of the firms that it has taken over, as illustrated below. Take my own case as an example. My main marching order was to make sure that I incarnated our values and philosophies, and brought alive these in an organization growing in acquisition. It is a bit like making a melting pot happen.

 

We as senior expatriates are charged with the task of taking wide-ranging values and make them consistent. As an expat, you walk in and you are first and foremost an established and protector of the company’s values Preliminary Suggestions What these examples illustrate is that notions of skill are commonly defined by criteria that go beyond technical expertise as might be gained via the acquisition of formal qualifications or other training in engineering, or chemistry, for example. This appears to be the case in both manufacturing and services.

 

The responses demonstrate that senior expatriates are carriers of more than technical knowledge. They are trusted with the task of managing the restructuring of the global economy. What is also clearly expressed is a trust in their ability to represent, shape and establish the core values and philosophies of a TNC. They 13 are used by TNCs to spread to other geographies, values – documented or informally understood within the organization.

 

Expatriate Contributions:

Much research has been conducted among US MNEs and it has revealed “alarmingly high failure rates” (Brewster, 1988). Some expatriate failure rates reported, for example, are shown in Table I (Shen and Edwards, 2004). The complex and ever-changing global environment requires flexibility. The organization’s ability to devise strategic responses, however, may be constrained by a lack of suitably trained, internationally oriented personnel. Tung (1981, 1982) and Mendenhall et al. (1987, 1995) identified a negative correlation between the rigor of a company’s selection and training processes and its expatriate failure rate.

 

The use of more rigorous training programs could significantly improve the expatriate’s performance in an overseas environment, thus minimizing the incidence of failure. Earley (1987) has argued that cultural training enables individuals to adjust more rapidly to the new culture and be more effective in their new roles.

 

There is an association between met expatriate’ expectation and provision of international training. “Highly relevant cross-cultural training created either accurate expectations or expectations of difficulty prior to the assignment” (Caligiuri et al., 2001). Table II indicates some reasons for expatriate failure in US and Japanese MNEs (Tung, 1982; Dowling et al., 1999).

 

As Table II shows, expatriate failure is seldom a consequence of a lack of technical skills. The inability of both expatriates and their spouses to adapt is a far more important cause of expatriate failure. Studies have also found that between 16 percent and 40 percent of US managers sent on overseas assignments Order US Japanese

 

1 The ability of spouse to adjust Inability to cope with larger overseas responsibility 2 Manager’s inability to adjust Difficulties with new environment

 

3 Other family problems Personal or emotional problems

4 Manager’s personal or emotional maturity Lack of technical competence 5 Inability to cope

 

With larger overseas responsibility the ability of spouse to adjust Table II. Reasons for expatriate failure (in descending order of importance) Expatriate failure rates (%) Origin of MNEs 30-85 US 70 Developing countries 5-15 European 10-30 US 40.2 Swedish 25- 40 US 5-10 European Table I. Expatriate failure rates JMD 24, 7 658return prematurely because of poor performance or an inability to adjust to the foreign environment.

 

According to Brewster (1988), the inability of one’s spouse to adjust was the only consistent reason given by respondents from European MNEs. Hamill (1989) found that one of the reasons for the low failure rate of UK MNEs was the greater emphasis placed on pre-departure briefing for both expatriates and their families. International management development deals with identifying, fostering, promoting and using international managers. Its major issues include international management development schemes, approaches to international management development, promotion criteria and factors affecting approaches to international management development.

 

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