The Connectivity And Interdependence Of The Worlds Market

Published Date: 02 Nov 2017

Expatriate is sent to host countries expected to transfer knowledge, group policies, strategies and procedures and lead to organization success. However, the failure of expatriate assignment is very costly for organisations (Coperland and Griggs, 1985). The damage of reputation, the lost in business opportunities, market share and employee talents (Black and Gregersen, 1991; Naumann, 1992) continue to challenge multinational organisation.

1.2 Research Question and Objectives

The following research question has been developed with the objectives to explore the causes of failure of expatriate assignments with the attempt to go beyond the assumption that expatriate failure is not solely caused by the expatriate’s inability to adjust to new environment. The ability of members of organization, such as the keys players of parent country manager, human resource department, host country subordinates (Selmer 2002), and accompanying family of the expatriate have to adjust and contribute effectively to support the expatriate better during the international assignment.

This research is designed:

To identify the reasons of expatriate failure

To investigate how to manage expatriate effectively

To explore the role of International Human Resource Management

1.3 Structure of Report

This research aims to comprise major literature reviews of the topic of Expatriate Failure. The output of the research is supported by a bibliography of the selected literature.

The research is divided into four chapters. Chapter one is about the background of the research, the research questions and objectives, as well as the structure of this research. Chapter two is the literature reviews. They are searched from online databases of academic journals and books. Subjects of Expatriate Efficiency, International Assignment are established for the selection criteria. Objective and rigorous literature review methodology is used to conduct the research. The data from the literature is analysed and selected as the basic elements of the research argument and the evidence is used to support the viewpoints of implications for practicing managers in chapter three. Chapter four is the conclusion of the research as a whole, with the appendix of information, and the list of bibliography.

Chapter 2: Literature Review

2.1 Introduction

Hill (1998) described an expatriate is one country's citizen and works in another subsidiaries of the organisation in another country, while expatriate failure is explained as the early termination of an assignment. The early termination includes resignation, dismissal, and return to the home country or move to another country. Tung (1987) argued that expatriate failure is an expatriate unable to perform effectively in an oversea country. Briscoe (1995) described expatriate failure as poor performance in international assignment.

2.2 Reasons for failure

Previous research supported the view that the result of an expatriate assignment was related to the expatriate selected for international assignment was lack of ability to adjust to the unfamiliar environment. In fact, the adjustment process could be influenced by the relationships between the expatriate and the other participants in the expatriate assignment.

The numerous relationships of host-country employees contributed to expatriate failure. Study stated that the need for preparation of host-country employees to work with an expatriate was widely underestimated and the preparation of the host countries employees was often ignored by parent companies (Vance and Ring, 1994). It is suggested that not only the expatriate but also the host-country nationals and the parent company superiors should be trained cross-culturally and prepared to adjust to unfamiliar working and cultural style.

The reactions of host country national employees to expatriate hads direct impact on support for expatriates and thus affect expatriate’s performance (Selmer, 1995). Host nationals might withhold vital information against the expatriate (Pucik and Katz, 1996) or they display collective behavior and treat expatriate as out-group foreigner (Florkowski and Fogel, 1999; Toh, 2003), or see expatriate as rival and hindering their career advancement opportunities (Watanabe and Yamaguchi, 1995).

Organizational support had direct relationship to improve expatriate effectiveness (Kraimer et al, 2001, and Shaffer et al, 1999). Chen et al (2005) and Shaffer et al (1999) studied the organizational support most commonly provides to the expatriate only focus on coordination of the expatriate and family members in cross cultural training, on package of compensation and benefit, on relocation support, such as, property hunting and visa application, and on repatriation, was not enough. Shaffer et al. (2001) stated that the expatriate would psychologically withdraw when they are lack of organizational support. Mezias and Scandura (2005) argued that some headquarters do not possess the knowledge and resources to provide better support for the expatriate, and the expatriate is too powerless to fight alone initiating all the policies in the host-company. The quality of organisational support affects organisational commitment and performance of expatriates (Steers and Porter, 1991).

The pre-arrival information on goals, role and responsibility of the expatriate has impact on the result of international assignment. The ambiguity of goals, rules and responsibility would cause major disagreements between parent country and host subsidiaries. Disagreements are the indicators for less organizational commitment and causes of expatriate failure (Gregersen and Black, 1990).

The Global Relocation Trends Survey (Brookfield GRS, 2012) highlighted it as the top reason, 33 percent of expatriate assignments failure was family concerns. The selection of expatriate candidates focuses on technical ability, the receptivity of expatriate and accompanying family members are often ignored. Shaffer and Harrison (1998) found that the family influences on expatriates of partner adjustment and partner satisfaction influenced expatriate's non-work satisfaction.

All actors in the international assignment, including home office staff and home superior, needed a set of intercultural competences that facilitated their relationships (Harvey and Griffith, 2002). The factors that contribute expatriate failure include lack of sophisticated selection process, the receptivity of expatriate and his or her family, lack of preparation for host country employees and parent company superiors, the ambiguity of goals, roles and responsibility of expatriate and lack of organizational support.

The following is going to discuss how to use selection, training, mentoring system, performance management system and the practices of international human resource management to reduce or eliminate the mentioned problems.

2.3 Effective Expatriates Management

2.3.1 Selection

The selection of expatriate acts as a key factor affects the result of expatriate assignments (Harris and Brewster, 1999; Black and Gregersen, 2007). A successful expatriate manager should have the ability of technical, political, social, organisational and cultural competencies (Ghoshal and Bartlett, 1997). Mendenhall et al. (1987) and Tung (1981, 1982) agreed that technical and functional expertise are the primary criterion in expatriate selection. Other theories focused on the personal characteristics of expatriates, for example, Baliga and Baker (1985) and Tucker (1978). Bennett et al. (2000) and Forster (2000) emphasied the concepts of expatriates selection should go beyond functional and technical skills, to assess individual characteristics and intercultural skills.

The fit between the exciting knowledge, skill and attitude of expatriate candidate, and the requirement of jobs are the foundation of selection criterion. The expatriate had to fit in the knowledge context of the host countries assignment which they are assigned (Bender and Fish, 2000)

Besides, Tharenou (2003) suggested that the candidates should have receptivity to work abroad. The job requires the expatriates to leave the familiar environment and go beyond the comfort zone. Prior cooperation with colleagues from different countries and prior foreign working and living experience could be used as indicators in interpersonal and cross-cultural skills. It was believed that the expatriate could be more easily adapt to the host countries than others who do not have these experiences (Martin, 2004).

The expatriate selection could be influenced by the cultural environment which the individual would be assigned (Harvey, 1996a). The cultural differences between the parent and host countries are needed for assessment, as it is more difficult for expatriates to succeed in host countries if the cultures of parent and host countries are too far different, as the cultural distance would affect the understanding of expatriates in decision making process, values, habits, communication and negotiation patterns, etc. (Gomez-Mejita and Palich, 1997).

The biggest reason for expatriate failure has been identified as the problem related to the family or spouse (Harvey, 1998; Fish and Wood, 1997a). In order to reduce the negative impact of family or spouse related problems, Harvey and Novicevic (2001) suggested an interview and a detailed assessment are required to evaluate the readiness ad adaptability of family. The assessment includes the career stage and employment potential of the spouse, the education attainment of the children, their special needs, such as, living environment and medical, their previous relocation experiences, and the overall level of support to the expatriates' decision of relocation. Harvey (1997) identified the family concerns do not only contribute to the failure and also the increase of refusal to relocation. Therefore, the family and spouse consideration is essential in expatriate selection process.

Harvey and Novicevic (2001) emphasized the expatriate ties to the headquarters are an issue. Internal hired expatriate has a longer history and stronger relationship with the parent company, thus face less conflicts during their assignment than externally hired expatriates. Externally hired expatriate lack of the networks and relationships with the parent company superiors therefore their work was perceived ineffectively or goals were not easily accepted.

2.3.2 Training

Research shown the cross cultural training for expatriate is generally effective in expatriate adjustment (Black and Mendenhall, 1990; Waxin and Panaccio, 2005). 85 percent of respondents from the Global Relocation Trends Survey, (Brookfield GRS, 2012) rated the expatriate cross-cultural training are useful. The training usually focuses on value of foreign culture, awareness and adjustment to different cultural dimensions, that supported by Hofstede (1980, 1991, 2001) and Trompenaars and Hampden-Turner (1993, 2005). Hofstede (1980, 1991, 2001) discussed on the differences in attitudes and behaviours of employees from different national culture, while Trompenaars and Hampden-Turner (1993, 2005) presented how to deal with cultural differences.

Effective cross-cultural would help expatriates in adaption and better function in new environment, reduces the pressure on the newcomers to follow the societal norms and expectations, as well as the communication patterns of the host countries (Haslberger, 2005; Kim, 1988).

Liu and Shaffer (2005) suggested training programs for host country employees should include the culture of parent organization. The cross-cultural seminars and language training should be offered in preparation stage, prior to departure, in order to help building up good working relationships with the host and parent organizations at an early stage (Aycan, 1997a). Some knowledge about the local language could help the expatriate in socializing with the locals. All expatriates, accompanying family members, parent and host countries employees are suggested to attend cross-cultural seminars, because it made them more open to observe work and life differences and reduce their feeling of uncertainty.

Provide site visit for the whole family before the assignment was accpeted (Briscoe, Schuler and Claus, 2008). The job description and goals should be clearly defined and communicated to the expatriate and host country employees. The cross cultural training creates higher cultural tolerance and improves the job effectiveness of the expatriate (Cox, 1994).Social networks are the social structure made up of a set of relations, linkages and ties among people that help to communicate, provide and access to resources and information (Hoang and Antoncic, 2003).

Social interactions between the expatriate, host country employees and other expatriates would enhance performance (Au and Fukuda, 2002; Caligiuri, 1997; Shaffer and Harrison, 2001). The information from co-workers and subordinates could enhance the understanding of the host working environment. Aycan (1997a) argued the better understand and adjust with the cultural background of host country employees and parent-country managers, the more positive impact on the result was reflected on expatriate assignment. Vance et al. (1993) suggested that the training of host country employees should also focus on their attitudes, perceptions and skills be brought to a level of support for the expatriate.

The culture and language training for the expatriate prepared the expatriate feeling more comfortable to communicate basically with host-country people to show friendliness, but it should not be expected that the expatriate would be able to conduct business negotiations only attended a short timescale of introductory course. Kraimer et al. (2001) and Feldman and Bolino (1999) suggested the use of mentors in the host facility to facilitate better expatriate adjustment. The mentoring systems could facilitate the expatriates in cultural adjustment, provides direct learning and on-job training opportunities on daily job or on a specific task.

Mentor helps expatriate to adjust to new culture (Feldman and Thomas, 1992), represents the expatriate’s interest in the home-country office and reduce uncertainties (Webb, 1996). Mezias and Scandura (2005) suggested that the use of multiple mentors could support expatriate effectiveness better. Harvey and Wiese (1998) recommended multiple mentors should be assigned in the home-country office as well as in the host-country company.

In host country, expatriate could learn the appropriate behaviour in a different culture from the mentor. To maximise the positive effect of mentoring system, the mentor in the host locations should have the necessary authority and should be one of the stakeholders of the local management team (Jasawalla et al., 2006). Mentor in the home-country office would enhance expatriate managers’ experiences and reduce stress (Feldman and Thomas, 1992; Harvey and Wiese, 1998). Mentor in the home-country had to ensure that expatriate was considered in the home company (Jasawalla et al., 2006).

Higgins and Kram (2001) emphasied the use of peers as mentors in the host country could better facilitate relationship network between expatriate and host-country work environment. Kram (1985) stated that different mentors with different expertise could provide different service during different stages of the expatriate assignment.

2.3.3 Performance Management

The following introduces the influence of performance management system on expatriate effectiveness.

Expatriate should be allowed to participate in the goal setting process with parent managers which they could turn down the unrealistic goals. Expatriate in a position of communicator provides real picture and constructive feedback to parent company. Headquarter thus gets a better picture and understanding of host country, reduces conflicts and wrong expectations to expatriates performance. Caligiuri (2000) suggested that the expatriate's performance on goals and objectives should be set on the opinions from a number of experts, including the expatriate to avoid bias. The clarification of performance goals is critical in linking organisational strategies with the performance management practices of expatriates (Tahvanainen, 1998).The clear objectives and expectations for the expatriate should be articulated to reduce the ambiguity surrounding the expatriate assignment, and ensure the goals of the expatriate and the goals of the organisation are aligned (Dowling and Welch, 2004).

To evaluate the performance of expatriate, Black et al (1992) assumed that multiple raters system is fair because the raters have different relationships with the expatriate and that could minimize bias and errors. However, it is difficult to reach a conclusion when using multiple raters (Harris and Schaubroeck, 1988), due to contradicting goals and interests, as well as different levels of knowledge to measure the performance of expatriate.

Luthans and Farner (2002) recommended the use of 360-degree feedback, which expatriate receives various ratings from variety of sources include: peers, managers, direct reports, and even customers. The 360-degree system provides a more balanced evaluation that is usually more accepted by review subjects as fair and objective. The variety of sources provide increased amount of information regarding what others expect of expatriate, that increase the self-awareness of expatriate (Fletcher and Baldry, 2000), identify strengths and performance gaps and to evaluate for development and promotion thus improve performance of expatriate.

Expatriate knows the situation better. Bartlett and Ghoshal (1987) suggested parent company should give anatomy to expatriate in the recruitment and selection process of local subordinates, choose talents with abilities that support goals of expatriate.

Trust between home country and expatriate would also influence the effectiveness and validity of performance management system. Trust is defined as the confidence in another’s good will (Ring and Van de Ven, 1992). When individuals trusted one another they were more willing to make commitments (Ring and Van de Ven, 1992; Tyler and Kramer, 1996). The length of time an expatriate has worked for the parent company and has known the management in home country and host country had strong impact on commitment and trust, and on performance (Gregersen and Black, 1992).

The international work environment is often described as less trusting because of different cultures and expectations (Johnson and Cullen, 2001). Often employees in the parent company assume that the business practices are the same everywhere and it is the expatriate’s responsibility to execute those practices and achieve performance (Black and Gregersen, 1999). However, management practices that are proved effective in the home country might be ineffectual or little effect in host country which is culturally dissimilar to it (Triandis, 1982; Hofstede, 1993; Black and Porter, 1991).

When clear guidelines and expectation are given to expatriate, host employees and parent country management, the uncertainty in a new environment would be reduced (Brett, 1980). Black and Gregerson (1991) found that for the role clarity, role discretion and role conflict are significantly related to work adjustment and thus affect the expatriate success (Sagiadellis, et al, 2004). The greater the role ambiguity among the related parties, including the host country employees, expatriate and parent country management, the less able expatriate can predict how others in their organization respond to decisions he or she makes, cause them not making necessary or right decisions (Black, 1988).

Aycan (1997b) suggested that the organisational support could assist expatriate in reducing the time on adjustment to the new work setting and soothes the change, result in the expatriates could fit in the unfamiliar working environment from the earlier period and deliver the expected performance.

One of the organisational supports come from the International Human Resource Management that is discussed below.

2.4 The Role of International Human Resource Management

2.4.1 The Staffing Policy

The role of international human resource management (IHRM) is very important in helping to achieve the success of an expatriate assignment (Scullion and Brewster, 1999, Dowling et al., 1998).International human resource manager has to develop practices to manage expatriate which maintain quality of international assignment with the overall strategic goals of the parent company, and balance the economic, social, political and legal constraints of the organisation (Milliman et al., 1991).

Heenan and Perlmutter (1979) developed four management strategies: (1) ethnocentric, (2) polycentric, (3) regiocentric and (4) geocentric. Caligiuri and Stroh (1995) interpreted these four strategies as follows.

(1) Ethnocentric: Top management of parent company implements values, policies and practices of parent company, apply maximum control in order to integrate host subsidiaries, regardless of environmental or cultural differences. It is neither globally integrated nor locally responsive.

(2) Polycentric: Top management emphasises environmental and cultural differences, considered deliberately to operate host subsidiaries as local as possible.

(3) Regiocentric: Top management emphasises environmental and cultural regional differences and considered deliberately to operate host subsidiaries as regional as possible.

For the polycentric and regiocentric organizations, host country employees manage the subsidiaries, and expatriate is rarely used. Host country employees are recruited and developed on a limited regional basis, such as the East Europe, the Middle East or the Greater China. The polycentric and regiocentric approaches both satisfied more local responsiveness but with less corporate integration.

(4) Geocentric: Top management operates functionally, recognises differences of environment and culture, attempts to balance both global integration and local responsiveness.

One way to increase expatriate effectiveness is to improve recruitment procedures and select the most suited candidate. Geocentric strategy could be used in staffing policy to locate the best talents, regardless of nationalities. (Heenan and Permutter, 1979; Kobrin, 1988).

In geocentric organisation, the parent company and the host subsidiaries view themselves as integrated parts in the global, multi- national organisation, therefore, the corporate culture would be highly unified, and not centred controlled by parent company (Caligiuri and Stroh, 1995). The organisational value, behaviours and norms are controlled through socialization, with greatest flexibility of decentralisation to accommodate the differences among various cultures (Edstrom and Galbraith, 1977). The socialization processes increase employees’ knowledge of the entire business networks of global organisation (Bird and Mukada, 1989).

On the other hand, ethnocentric organisation maintains the parent company culture through the role of dictator, and the level of dominance control is more than regiocentric, polycentric and geocentric. Ethnocentric company is found to be less successful than company operating under any of the other three strategies (Caligiuri and Stroh, 1995). In summary, the geocentric staffing approach is an ideal strategy that balanced both global integration and local responsiveness.

2.4.2 Other Practices of the IHRM

The multifaceted role of IHRM also includes being a professional service provider to help employees and their families to deal with the problems associated with the well-being of expatriate and his or her family, such as, job search, continuing education and allowances for seminars and conferences (Shaffer and Harrison, 1998).

Looking for accommodation can be stressful for expatriate, especially when he or she does not speak the language or is not familiar with the rules and regulations of host country, or the expatriate cannot afford the time to go around with the family in property searching. The IHRM can help in finding accommodation and helping with the legal issues involved. Shaffer and Harrison (1998) suggested that the IHRM should pay attention to the satisfaction and adjustment of expatriate’s partner.

The organisational climate is a strong predator of staff morale (Griffin, et. al, 2000). Positive and supportive working environment could enhance expatriate's performance by effective cooperation among parent countries managers, expatriates and host countries employees. Cooperation was defined as mutual goals, mutual rewards, shared resources and complementary roles (Qin et al., 1995).The enhanced leadership, effective IHRM, supportive performance appraisal, roles clarity and goal alignment (Hart and Cooper, C.L., 2001) are effective in developing staff morale. Suutari and Burch (2001) advised the IHRM should develop informal networks, communities or formal network to help the transition and give support, particularly during the beginning stage of expatriation for better integration and adjustment.

At the end of the assignment, the expatriate would be back to the home country, sent to another country, or becomes localized in the host country. The repatriation management remains a great challenge for the organisations (Gregersen and Black, 1995; Caligiuri and Lazarova, 2001).

Repatriate can support the approach of learning organisation by the increase activities of knowledge transfer from host countries to headquarters and vice versa (Lazarova and Caligiuri, 2001), it provides opportunities for repatriate to use and transfer their knowledge. However, repatriate always find it difficult to readjust to the lifestyle back home and the changes at home country offices might make the expatriate feel like stranger.

Dissatisfied repatriate is more likely to resign and work with other companies. Organisation may lose the valuable source of global competence to competitors if it has difficulty in retaining the repatriate (Handler and Lane, 1997; Stroh et al., 1998).

Briscoe, Schuler and Claus (2008) suggested the IHRM should design the career planning for expatriates prior to the international assignment and updated during the assignment, to ensure the repatriates return to specific positions, that use the best of international experience, knowledge and skills from the worldwide repatriates and integrate with the global strategy of the organization.

2.5 Conclusion

This chapter has presented a review of literature related to expatriate failure. Previous research has often described the expatriate failure is the result of inability of the expatriate to adjust to the unfamiliar host country working and cultural environment (Shaffer et al, 1999; Caligiuri, 1997; Briscoe, 1995; Mendenhall and Oddou, 1985; Tung, 1981). The studies of various research highlighted the success of expatriate assignment is not solely relied on the inability of expatriate in adjustment to host working and cultural environment. The staffing policy, candidate selection and the receptivity of accompanying family members are also some of the biggest concerns (Caligiuri and Stroh, 1995; Bender and Fish, 2000; Harvey, 1998; Fish and wood, 1997a).

Other literatures explored the understanding of cultural differences and the relationship of parent and host country employees with expatriate can also affect the performance of expatriate (Vance, et al., 1993; Aycan, 1997b; Shaffer et al., 2001; Liu and Shaffer, 2005). And the use of mentoring system can affect expatriate adjustment (Feldman and Thomas, 1992; Mezias and Scandura, 2005; Jasawalla, 2006).

Some other literature looked at how to effectively evaluate the expatriate performance (Caligiuri, 2000 ; Tahvanainen, 1998; Dowling and Welch, 2004). Luthans and Farner (2002) recommended the use of 360-degree feedback system provides detailed analysis of expatriate performance on what can improve.

The effective IHRM help to build relationship network and provide support that facilitate the expatriate effectiveness (Bird and Mukada, 1989; Shaffer and Harrison, 1998; Suutari and Burch, 2001). Gregersen and Black (1995) and Caligiuri and Lazarova (2001) identified the repatriation process should not be neglected.

No one aspect is more important than the other. All participants involved in the expatriate assignment, such as parent-country superiors, host-country subordinates, expatriates and the accompanying family, are closely interacted and critically important in facilitating to increase the chance of success in expatriate assignments. The result of an expatriate assignment as a result of multiple interrelationships is explored.

This study investigated the reasons for expatriate failure and contributes new evidence to previous research that the failure of an expatriate assignment was commonly explained as a result of the inability of the expatriate to adjust to the unfamiliar host country environment (Shaffer et al, 1999; Caligiuri, 1997; Mendenhall and Oddou, 1985; Tung, 1981). However the researched data proved that the explanation appeared too narrow to explain the complexity of an expatriate assignment failure.

The level of host country employee's understanding of cultural differences and the relationships between the expatriate and host-country employees also affected expatriate's ability to adjust to the new environment (Liu and Shaffer, 2005; Shaffer et al., 2001; Aycan, 1997a; Vance and Ring, 1994).

The findings suggest that the performance goals should be agreed by key stakeholders (Caligiuri, 1997; Gregersen et al., 1996; Mendenhall and Oddou, 1991). The parent country managers have to obtain a better understanding of the culture of the host country and the working environment of the expatriate in order to define better goals, make fairer judgments and provide better support.

The findings of this research also emphasise on the well positioned mentor has the positive impact on the expatriate’s adjustment (Mezias and Scandura, 2005; Kraimer et al., 2001; Higgins and Kram, 2001). The research also agrees that the receptivity of expatriate's family has direct impact on the non-job satisfaction of expatriate and increase the refusal rate of relocation.

Nevertheless, the effective repatriation system is required to retain the repatriate, minimize the potential effects of reverse culture shock and maximize the experience and knowledge of repatriate to successfully operate the global business.

The globalization is seen as the unassailable future for organisation (Brewster and Suutari, 2005). The results of this research supports that the outcome of an expatriate assignment is a contribution of multiple interrelationships between all participants involved in the expatriate assignment, such as parent-country superiors, international human resource management, other involved host-country employees, expatriates and the accompanying family members.

4.2 Limitations and Implications for Future Research

The results of this research are only based on literature review and have not been tested. Limited dimensions of expatriation theories are included to investigate the picture of the topic of expatriate failure. Empirical and objective data are suggested to be collected for future research. The interview only provided qualitative data from participants of a British company that based in Hong Kong. The sample is biased because the interviewed participants might avoid telling the truth and report their own mistakes. Therefore, it affects the result in implications for practicing managers.

Suggestion for future research is to conduct the investigation the best practices for international assignment of global organisation. A thorough research for different groups of expatriates, in terms of age, education, gender, nationalities, is needed. And a large quantity of sample should be collected, in order to understand the similarities and differences of different groups and provide new insights about the success of international assignment.

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