FH MAINZ – MSC. INTERNATIONAL BUSINESS

Effectiveness of Expatriate Management

Cross-Cultural Trainings and Selection Criteria

February Amelia Curry

Matrikel-Nr. 9037038

Prepared for: Prof. Dr. Susanne Rank

Due Date: December 15, 2009

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Table of Contents

I. Introduction ................................................................................................................................ 3

II. Critical Success Factors for Expatriation .................................................................................... 4

III. Selection Policy .......................................................................................................................... 6

IV. Pre-Assignment Training ............................................................................................................ 9

V. Discussion .................................................................................................................................11

VI. Conclusion ................................................................................................................................13

Bibliography ..........................................................................................................................................15

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I. INTRODUCTION

Greater integration among nations corresponds to increased interconnection of economic and

business activities across frontiers. Dicken (2007) has suggested that foreign direct investment (FDI) is

one of the measures of interdependence in global economy. Since 1990s, we have witnessed increasing

FDI activities coupled with the growth of multinational enterprises (MNEs) at unprecedented

acceleration. On the other hand, human assets are one of the factors significant for competitive

advantage of global organizations. Therefore, the growth of globalization has necessitated better

understanding of human resource management aspects for business operating globally, namely the

staffing, training and selection policy.

One of the important issues of staffing for MNEs is expatriation. International assignments can

be seen as a part of international business strategies, in which expertise is seen as a competitive asset

and headquarter can assert better control of know-how transfer to its subsidiaries in host countries.

However, expatriation is not only costly and time-consuming; it also presents considerable risks to

business in the host country (Harris & Brewster, 1998). Some have suggested that the failure rate of

expatriation, in terms of premature return home or underperformance, is very high (Zeira & Banai,

1985); although it has also been challenged that there is a lack of empirical evidence to support the

notion of high expatriation failure rates when measured by the percentage of expatriates returning

home prematurely (Harzing A.-W. , 1995).

Ensuring the effectiveness of expatriations leads to questions such as the extent to which

international manager selection or pre-assignment cultural training increase the success rate. This paper

attempts to address this issue by identifying key critical success factor of international assignments.

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II. CRITICAL SUCCESS FACTORS FOR EXPATRIATION

According to Schuler (2000) human resource management (HRM) practices comprise of two

main categories: (1) the activities, policies and practices of people management which enable firms to

compete effectively and (2) the diverse and dynamic factors such as new competitors, new technology,

legal and social concerns, that need to be recognized and acknowledged by organizations in order to

ensure their sustainable competitive advantage.

Expatriate can be defined as someone who does not live in their own country (Cambridge, 2008).

In this paper, expatriates refer to executives and managers assigned to foreign subsidiaries. Due to the

costs and business risks involved, expatriation is a key subject in international human resource

management (IHRM), which essentially has the same functions as HRM albeit applied in international

aspects by taking into account the complexities of operating in different countries with different

regulations and cultures and dealing with employees of different nationalities (Schuler, 2000).

Variables that might influence successful expatriate management can be classified in four

general categories: technical competence, personality traits and related cross-cultural skills,

environmental variables, and family situations (Tung, 1981). Several literatures have argued that

technical competence is considered by the MNEs, the expatriates themselves, and by host country

nationals as the most important factor in recruiting and/or selecting expatriates (Suutari & Brewster,

2001); additionally this factor is usually accessible and measurable (Tung, 1981). Another reason why

many personnel administration might place heavy emphasis on the ability to perform the task being

considered is the so-called “minimax” decision strategy (Tung, 1981) in which the selectors minimizes his

own risks and prevents immediate failures.

The easiest way to determine whether someone has the right and superior competence for the

job overseas is to look at the domestic track record of the potential candidate. However, the pitfall of

this approach is to assume that the successful domestic performance will translate into the same level of

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performance overseas. Furthermore, this approach also assumes the universal nature of managerial skills

(Harris & Brewster, 1998) which may not be necessarily true in case of complex international

assignments.

Personality traits refers to “the ability of the individual to deal effectively with his superiors,

peers, subordinates, business associates and clients” (Tung, 1981) which in international assignment it

gains increased importance because it also include the adaptability to the diversity of value systems,

beliefs, customs, and ways of conducting business in the foreign subsidiaries. Specifically, some have

identified five traits perceived as foretelling in expatriation success and international assignment (Burke,

Watkins, & Guzman, 2009; Ones & Viswesvaran, 1999; Harvey & Novicevic, 2001): (1) extroversion or the

assertiveness of individuals and their ability to achieve relatively better reception in social context, (2)

agreeableness which can be defined as team player skills, (3) conscientiousness which is associated with

honesty and perseverance in order to enhance organizational performance, (4) emotional stability

primarily in coping with professional and personal stresses, and (5) open-mindedness and intellectual

ability to work effectively which will contribute to one’s ability to adapt to changing environments.

International adaptability is closely related to the cross-cultural communication competence,

which encompasses not only language skills but also the ability to grasp nuances and non-verbal clues

often inherent in some cultures. However, cross-cultural skills is not only limited to communication; it

also encompasses sensitivity to cultural differences and cross-culturally adventurous which may be

indicated by previous cultural adjustment experiences or extensive foreign travel (Harvey & Novicevic,

2001; Spreitzer, McCall Jr., & Mahoney, 1997; Cui & Awa, 1992).

The political, legal, social and economic systems of a host country may present challenges for

expatriates. Relocation to the macro environment which differs greatly from that of the home country

may lead to adjustment problems for the international executives (Tung, 1981). Additionally, cultural

distance appears to correlate inversely with the ability of expatriates to effectively contribute to

subsidiary operations (Harvey & Novicevic, 2001).

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The adjustment of living overseas is not only limited to the expatriates, but also to their families.

The ability of the families to deal with problems arising from living with and working among people of

different cultures also affect the effectiveness of expatriation.

III. SELECTION POLICY

Some literatures argued that personality traits and cross-cultural abilities may increase the

probability of successful expatriation considerably (Tung, 1981). Furthermore, it also has been proposed

that these personality factor and relationship skills, coupled with family factor, often found to be the

crucial sources of failure (Tung, 1981; Harvey & Novicevic, 2001). These personality factors are usually

determined by interview and other psychometric instruments (Tung, 1981); nevertheless, the selection

methods also bring about the distinctive problems: the limited formal testing for potential candidates

and the subjectivity generally viewed as embedded in cultural awareness and adaptability tests (Harris &

Brewster, 1998).

One of the selection frameworks, a competency-based perspective of expatriate selection,

acknowledges interconnectedness of input, managerial and transformation-based competencies which

include personal social capital, adaptability and learning skills ingrained in the expatriate managers

(Harvey & Novicevic, 2001). The following Figure 1 and Figure 2 illustrate the framework of selection and

the expatriate selection processes, respectively:

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Figure 1. Competency-Based Framework of Expatriate Selection (Harvey & Novicevic, 2001)

Figure 2. Expatriate Selection Processes (Harvey & Novicevic, 2001)

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Clearly, competency-based selection process emphasizes the importance of the right-fit of personality

traits to the task under consideration and external environment of the host country.

Furthermore, the nature of selection processes can be classified as following:

FORMAL INFORMAL

OPEN Clearly defined criteria

Clearly defined measures

Training for selectors

Open advertising of vacancy

(internal/external)

Panel discussions

Less defined criteria

Less defined measures

Limited training for selectors

No panel discussions

Open advertising of vacancy

Recommendation

CLOSED Clearly defined criteria

Clearly defined measures

Training for selectors

Panel discussion

Nominations only

(networking/reputation)

Selectors’ individual

preferences determine criteria

and measures

No panel discussions

Nominations only

(networking/reputation)

Table 1. Typology of International Manager-Selection Process (Harris & Brewster, 1998)

It appears that open and formal selection is the best system with distinctive advantages of

clearly defined criteria and measures, which is important to evaluate progress, bigger pool of potential

candidates, and relatively greater objectivity due to the consensus-based decision making among panel

selectors.

As a cautionary side note, in her survey to determine the causes of expatriation failures in U.S

multinationals, Tung (1987) concluded that the inability of the expatriates’ spouse to adjust is the main

source of failures, even more determining than the inability of the expatriates themselves to adapt.

Other family-related issues are also more important than the task-related competencies. Yet, in practice

the majority of organizations do not conduct interview for the spouse and/or family of the candidates

(Harris & Brewster, 1998; Tung, 1982).

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IV. PRE-ASSIGNMENT TRAINING

Pre-assignment training is defined as “the educative processes used to improve intercultural

learning via the development of the cognitive, affective, and behavioural competencies needed for

successful interactions in diverse cultures” (Littrell, Salas, Hess, Paley, & Riedel, 2006). It is usually the

preferable approach to supplement expatriates with the necessary cross-cultural skills when the main

priority is placed on the technical competence (Tung, 1981). Although generally it is not considered to be

critical for the success of international assignment, the employers presume that proper training can

stimulate significant changes in attitude and mindset to better prepare the candidate for the cross-

cultural interaction abroad (Tung, 1981). Those who adopt this course anticipate that with sufficient

training and knowledge about cultural issues, the expatriates can adjust better and faster.

The training programs related to cross-cultural skills can be grouped into the following categories

(Tung, 1981): area studies program, culture assimilator, language training, sensitivity training, and field

experiences. Area studies programs constitutes of environmental and cultural orientation trainings

designed to provide the expatriates chosen with information regarding the geography, economic

development, cultural institutions and history of the host countries (Tung, 1981). The problem with this

program is the less defined measures of cultural differences between the home and host countries

(Tung, 1981).

Culture assimilator consists of 75 to 100 short episodes of intercultural circumstances and

suggested to be an effective method in assisting expatriates to adjust successfully with new cultures,

mostly when there is only a short time to prepare for departures (Tung, 1981). Two important

characteristics of culture assimilators are critical incidents and learning process (Bhawuk, 2001). It is

observed that culture assimilator has evolved to culture-theory-based framework (Bhawuk & Brislin,

2000) which is advantageous in preparing expatriates for assignment in various countries and applicable

for both individual and national levels (Bhawuk, 2001).

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Another form of pre-assignment programs which is very useful in helping expatriates to cope

with international assignment is language training; however it is time-consuming and poses a problem in

short-notice assignment. On the other hand, sensitivity training focuses on training cognitive behaviour

in affective level to develop flexibility and open-mindedness to different ways of doing things in different

culture (Tung, 1981). Lastly field experiences training can be divided into two categories: short-term

assignment to the host country and ‘simulation’ of the real condition in the host country by sending the

candidates to “microcultures” nearby to acclimatize the expatriates to similar living conditions they will

encounter in host countries (Tung, 1981).

The theoretical frameworks appropriated to cross-cultural trainings are summarized in the

following table:

Theoretical Framework Main Points

Social Learning Theory Experience and observed consequences of behaviour

shape learning

New behaviours maximized when individual observes

others performing the behaviours

Cross-Cultural Trainings viewed as social learning

process in which an expatriate acquires social skills

through observation and practice

U-Curve of Adjustment Theory Expatriate adjustment described as a function of time

Expatriate progresses from optimistic to confused to

near complete adjustment

Culture Shock Theory Four viewpoints regarding culture shock:

anthropological, psychoanalytic, behaviourist, and

phenomenological

CCT design enhanced if training approaches address

problems associated with all four culture-shock

viewpoints

Met expectations lead to higher job satisfaction,

commitment, adjustment and performance

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Unmet expectations may lead to job dissatisfaction and

turnover

CCT is seen as increasing the likelihood that expatriates

will develop accurate expectations

Sequential Model of Adjustment Training is a process

CCT should be structured to correspond to the cycle of

adjustment

Incorporates elements from pre-departure and post-

arrival training

Table 2. Theoretical Frameworks of Cross-Cultural Trainings (Littrell, Salas, Hess, Paley, & Riedel, 2006)

V. DISCUSSION

Cultural and relational abilities, unlike technical competence, are often difficult to be appraised

and evaluated in the forms of training. Frequently, despite the proper training, some people would not

benefit from it because of their inherently lack of cross-cultural competence. Furthermore, expatriate

trainings also suffer from subjectivity in compatibility expectations between home-country and host-

country organizations in respect to the individual effectiveness (Pazy & Zeira, 1985). Finally there is the

issue of superfluous exercise of training when applied in modality. Several forms of training, which are

fundamentally “class-trainings”, may not adequately simulate the real situation abroad, which could be

worsen if the assignment is to a significantly different macro-environment.

Additionally, some have attributed inadequate selection criteria as the decisive factor in failure

rates of expatriation (Forster, 2000) and consequently heavy emphasis is placed on variety of criteria to

achieve sound selection process which is viewed to play an important role for effective international

performance (Kealey & Protheroe, 1996; Baliga & Baker, 1985). However, pre-assignment trainings

should not be dismissed as irrelevant to the current expatriate management. They are still helpful in the

case of high-risk operations abroad where high emphasis is placed on technical and managerial

qualifications (Harris & Brewster, 1998). Furthermore, cross-cultural training which gradually exposes the

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candidates into a new culture and develops their familiarity and comfort also permits individual to adjust

promptly to the new culture and correspondingly to perform effectively in their new assignment (Black &

Mendenhall, 1990). The positive effects of intercultural trainings on cultural adjustment and managerial

performance overseas are due to reduction of perceived intensity of cultural adjustment, improvement

of global outlook, and increasing self-efficacy (Osman-Gani & Rockstuhl, 2009; Deshpande &

Viswesvaran, 1992; Black & Mendenhall, 1990; Earley, 1987).

Empirically, it is found that U.S multinationals tend to employ pre-assignment trainings less

frequently than the European and Japanese firms (Suutari & Brewster, 2001; Tung, 1982). It may or may

not be related to the higher failure rates among American expatriates compared to those of West

Europeans and Japanese expatriates (Harzing A.-W. , 1995), however it is suffice to say that combination

of pre-assignment trainings with proper selection criteria and procedures, such as the contingency

framework developed by systematically analyzing variations in degrees of contact with local cultures,

duration of stay, and the cultural differences between home and host countries (Black & Mendenhall,

1990; Tung, 1981) is still a robust tool in assisting expatriates and their families to adapt and adjust to

the new cultures.

In analyzing the performance of cross-cultural training (CCT), it is suggested that its effectiveness

is greatly influenced by factors such as the length of notice prior to departure, the country of

assignment, and family relationship (Forster, 2000), the different critical factor requirements and

priorities for cultural adjustment and effective job performance (Cui & Awa, 1992), and the gap between

individual’s expectation and the reality on-the-job (Caligiuri, Phillips, Lazarova, Tarique, & Buergi, 2001;

Oddou, 1991). To increase the potential benefits of such trainings, some studies have advised the

application of sequential training over various training period (Selmer, Torbiorn, & de Leon, 1998), a

multidimensional program using different goals, contents and approaches (Bennett, 1986), a cross-

cultural program that is tailored as close as possible to the circumstance in the host country in order to

produce maximum relevance (Caligiuri, Phillips, Lazarova, Tarique, & Buergi, 2001), a built-in evaluation

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system pertaining to pre-departure and post-arrivals (Morris & Robie, 2002; Grove & Torbiorn, 1985),

and finally an on-site socialization support by the headquarter and foreign subsidiaries such as assigned

mentors and social networks for expatriate families (Lee, 2007; Oddou, 1991; Katz & Seifer, 1986).

VI. CONCLUSION

Exceptional and well-prepared expatriate management can help to reduce costs and eliminate

other risks associated with international assignments and at the same time also optimizing the benefits

of such assignment for the organizations, the expatriates and the host countries. To achieve this goal,

clearly defined selection criteria customized to different circumstances in terms of the nature of the job

under consideration, duration and the country of assignment are critical to expatriation success. To

ensure the right-fit of the expatriates to the job abroad and the environment in the host country, the

right pre-departure and post-arrival trainings are viewed by many as effective complementary tools to

assist the expatriates in cultural adjustment and task performance.

Another issue that commands further studies is the family-related problems of couples with

dual-career. This issue is of increasing importance and imposes additional complexity on expatriation

management (Baruch, Steele, & Quantrill, 2002). It has been suggested that dual-career couples are

more likely to require paternalistic integration response by the headquarter post-arrival, such as

mentoring (Harvey, Buckley, Novicevic, & Wiese, 1999). However, there is a lack of theoretical

framework to understand the complications entailed in expatriation of dual-career couples.

Furthermore, expatriation has other aspects of importance for further research and worth of

consideration for a more holistic and comprehensive international human resource management

practices such as contract and remuneration package, performance appraisal and reward, and

repatriation (Harzing & Christensen, 2004). Most notable issue with repatriate management is the high

turnover rate once the individual is re-assigned back to home country (Baruch, Steele, & Quantrill, 2002).

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It has suggested that this effect is most likely due to the disappointment of repatriates when they realize

that their international assignments were not integrated into a career path development (Baruch, Steele,

& Quantrill, 2002).

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