Topic:
What problems would you anticipate, and why, if multinational companies continue to rely on parent (home) country nationals in managing their overseas subsidiaries? Critically discuss how management should respond to these problems.Essay Writing Tips
Format and style of the essay
•
Organised with introduction, main body and conclusion
•
Should be a reflective piece of work based on existing
literature (theories, case studies )
•
Write in a formal, not a colloquial style
•
Visual aids permitted but not necessary
•
Within the word limit of a coursework or within the time limit in
an exam
Format
•
•
•
Introduction
– general, key definitions, and explanation of the
way the answer will unfold
Body
– Present your evidence
– Make your argument on the basis of evidence
– Use subheadings if you like
Conclusion
– summary of key arguments as they relate to the
question; your evaluative conclusion
State
your logic throughout
What do good essays have in
common? (1)
1. Addressing the question
Good essays address the question directly and use
relevant material (knowledge, concepts, interpretation,
theoretical models, others’ perspectives).
2. Developing argument
Good essays contain a coherent and convincing set of
reasons for holding a particular point of view and an
analytical path leading from a starting point to a
concluding point.
3. Using evidence
Good essays include information, such as research
findings, facts, or quotations, that backs up the points
made in the essay.
What do good essays have in common? (2)
4. Critical evaluation
Good essays contain evaluative assertions about the value,
significance, strengths and/or weaknesses of something (e.g.
research findings, theory, methodological approach, policy,
another’s argument or interpretation).
5. Structuring
Good essays have clearly recognisable introductory and
concluding paragraphs, and paragraphs in the main body of
the essay each have a clear, single concept or point as their
main focus.
6. Use of language
Good essays have a fluent and clear writing style and are free
from errors in spelling, punctuation and grammar.
International staffing and expatriation
As the strategies for conducting international business have become more complex and
difficult, so also have the staffing options for such firms. This session will introduce the
nature of and problems associated with the staffing of multinational firms’ international
operations. It will analyse the challenges in global workforce planning for MNCs and their
staffing options within the changing global business environment and labour markets. It will
also discuss the different approaches to managerial staffing, expatriation and the tensions
between global coordination and local adaptation.
Core reading:
Reiche, Harzing and Tenzer (2018) chap. 5 or Harzing and Pinnington (2014) chap.5
Harvey, M., Speier, C. and Novecevic, M. M. (2001) ‘A theory-based framework for strategic
global human resource staffing policies and practices’, International Journal of Human
Resource Management, 12(6): 898-915
Collings et al (2010) ‘Swimming against the tide: outward staffing flows from multinational
subsidiaries. Human Resource Management, 49(4): 575-598
Collings, D.G. and Isichei, M. (2018) ‘The shifting boundaries of global staffing : Integrating
global talent management, alternative forms of international assignments and nonemployees into the discussion’. International Journal of Human Resource Management’,
29(1) : 165-187.
Supplementary reading:
Caliguiri, P. & Bonache, J. (2016). ‘Evolving and enduring challenges in global mobility.
Journal of World Business, 51 : 127-141.
Collings, D.G. et al. (2007) ‘Changing patterns of global staffing the multinational enterprise:
challenges to the conventional expatriate assignment and emerging alternatives’, Journal of
World Business, 42: 198-213
Colakoglu, S. et al (2009) ‘Towards a conceptual framework for the relationship between
subsidiary staffing strategy and subsidiary performance’ International Journal of Human
Resource Management, 20(6): 1291-1308.
Harzing, A-W. (2002) ‘Of bears, bumblebees and spiders: the role of expatriates in
controlling foreign subsidiaries’, Journal of World Business, 36(4): 366-379
Harzing et al (2015) ‘The bridging role of expatriates and inpatriates in knowledge transfer in
multinational corporations’ Human Resource Management, DOI:10.1002/hrm.21681.
Pinto, L.H. (2012) ‘Compelled to go abroad? Motives and outcomes of international assignments’,
International Journal of Human Resource Management, 23, 11: 2295-2314.
Tarique, I., Briscoe, D. R. and Schuler, R. S. (2016) International Human Resource
Management: Policy and Practice for Multinational Enterprises, London and New York:
Routledge, 5th Edition, chaps 8&9
Tung (2016) ‘New perspectives on human resource management in a global context’ International
Journal of Human Resource Management 51(1): 142-152
Tungli, Z. and M. Peiperl (2009). ‘Expatriate practices in German, Japanese, U.K., and U.S.
multinational companies: A comparative survey of changes.’ Human Resource Management,
48(1): 153-171
Examples of poor and better essay writing
A case study on McDonalds’
Royle, T. (1999) Recruiting the Acquiescent Workforce: A
Comparative Analysis of McDonalds’ in Germany and the UK.
Employee Relations 21 (6): 540 – 555.
Royle, T. (2002) Just Vote No! Union-busting in the European
fast-food industry: the case of McDonald’s. Industrial Relations
Journal 33 (3): 262-278.
In this document, I have taken out a section from two students’ essays,
which was the coursework set in the previous. In both sections, both students
have tried to articulate some points. However, student A has done a much
better job than student B. I must stress here that I do not have a single
formula for a good or bad essays. In fact, I have read very good and very bad
essays in all sorts for formats. So, what I present here are just indicative of
common ways that people do well or badly. The main differences between
Student A and Student B are:
Student A’s essay is well focused on the case study; Student B’s essay
discusses irrelevant issues
Student A makes more precise statements; Student B makes vague
and sometimes inaccurate statements
Student A’s essay contains a clear argument (which presumably
would be developed further in the essay as a whole); Student B’s
essay does not have a clear argument
Student A’s work has references to relevant work in an accurate
manner; Student B’s work makes limited references apart from the
articles given
Student A summarises ideas in a relatively sophisticated way and
demonstrate analytical skills; Student B’s arguments are rather
simplistic and descriptive.
As a consequence, Student A, writing the whole essay in a similar standard,
has achieved 1st class. Student B failed the coursework.
Student A (better)
The lack of appropriate compensation plan and
employee development strategy is one of the key HR
aspects that affected and also were affected by the
crisis at the McDonald’s. McDonald’s low wages is
considered a serious issue of concern for its workers,
taxpayers, labour unions and other relevant
stakeholders (Royle, 1999). According to Harzing et
al 2004), the multinational company has been widely
criticised for its exploitation of workers as reflected
by the low wages, poor working conditions, long
working workers, no benefits and lack of job safety.
This kind of planned worker exploitation is perceived
by the shareholders as a means of keeping profits
high and wage costs as low as possible. However, the
implications on employee performance, litigations,
fines, negative publicity, high staff turnovers, among
others, have characterised the McDonald’s opposition
to workers’ rights and unions. Income inequality
between the CEO-to-worker compensation is also
cited as one of the bad practices at many of the
McDonald’s restaurants and its foreign franchises all
over the world (Edwards& Rees, 2016).
Student B (poor)
In order to make profits in different countries, it is
necessary that McDonalds’ has focus on using
localisation strategies to suit consumers needs.
Simultaneously because of the cost of the workforces
in Europe are still increase(Royle, 1999), with the
goal of maintaining the flexibilities of local
McDonalds’, many managers in these branches are
show their preferences to hire local people(Royle,
2002) to provide services to local consumers and
keep avoid on accepting foreigner employees(Royle,
2002). However, this situation slowly became a
changes in HR field, for the different counties holds
different situations. Therefore, the general
phenomenon in two counties are not the same. In UK,
people who want to get a job in McDonalds’ or want
to receive experiences in McDonalds’ partly are
students(Royle, 1999). With the conveniences of
finding a part-time job（Royle，2002）, and the
suitable even better salaries, students are willing to
have a part-time job in McDonalds’ instead of using
spare time to work in other small restaurants. In
addition, to manage these seasonal part-time job and
short time sections, McDonalds in UK are make more
attempts to improve the HR
management（Royle，1999）to run branches in
efficient way, for their staff in UK obviously hold
high level of flow behaviours. Comparing with the
crews in America, McDonalds’ in China may not
have more turnover than McDonalds’ in UK
(Xie,2012). Every year, McDonalds’ welcomes
approximately 70 thousands employees to start their
career life in McDonalds’, and help more students
gain work experiences by providing them part-time
job opportunities. Finally, McDonald has
successfully reduced the 90 Days Demission Rates,
from 25 percent to 7.5 percent(Xie,2012). In other
words, people in China are prefer to apply a full-time
job. Therefore, comparing these character of
McDonald’s branches in China and UK, are cause a
result that although McDonald provide more chances
to employees, they may still maintain to choose local
people to became their new members and they may
not have enough chances to help foreigner employees
(Royle, 2002). Hence the change that citizens
occupied the working opportunities of these two
counties causes series of influences on McDonald’s
HR managements.
International Journal of Human Resource Management
ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: https://www.tandfonline.com/loi/rijh20
A theory-based framework for strategic global
human resource staffing policies and practices
Michael Harvey , Cheri Speier & Milorad M. Novecevic
To cite this article: Michael Harvey , Cheri Speier & Milorad M. Novecevic (2001) A theory-based
framework for strategic global human resource staffing policies and practices, International Journal
of Human Resource Management, 12:6, 898-915
To link to this article: https://doi.org/10.1080/09585190122394
Published online: 09 Dec 2010.
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Int. J. of Human Resource Management 12:6 September 2001 898–915
A theory-based framework for strategic
global human resource staf ng policies
and practices
Michael Harvey, Cheri Speier and Milorad M. Novecevic
Abstract As multinational enterprises increasingly globalize their operations, managing
international human resources strategically becomes a critical factor contributing to
overall organizational performance. The strategic management of international human
resources has received extensive attention, focusing on staf ng issues related to
expatriate assignments. However, empirical ndings indicate limited success of expatriation as an effective method for managing the breadth of international human resource
opportunities. As market opportunities increasingly shift to countries with high cultural
distance from the parent organization and as organizations evolve their strategic
orientation from multinational to global activities, it appears that an exclusive reliance on
expatriation-based staf ng will impede effective management of international human
resources staf ng. The objective of this article is to review and clarify a theory base that
can support a range of international human resource staf ng systems that might be
implemented in a global environment. This discussion uses the combined perspective of
agency and expectancy theories and discusses conditions under which speci c strategic
staf ng choices might be most effective.
Keywords
network.
Strategic global human resource staf ng; inpatriate managers; global
Introduction
Strategic global human resources management (SGHRM) has become a critical
management issue as multinational corporations (MNCs) increasingly globalize their
operations, requiring effective managers throughout the world (Schuler et al., 1993;
Taylor et al., 1996). Past research has focused heavily on strategic international human
resource expatriation-based staf ng for managing the combined control and coordination needs between subsidiary and parent operations (Baliga and Jaeger, 1984;
Martinez and Jarillo, 1989; Sohn, 1994; Taylor et al., 1996). This article examines
global staf ng options within existing SGHRM models and suggests an emphasis on the
strategic development of inpatriates, a candidate pool complementary to expatriates,
within existing strategic global human resource staf ng (SGHRM) policies and
practices. Developing inpatriates is particularly critical in light of signi cant changes
occurring in today’s international marketplace – a growing emphasis on global as
opposed to multinational strategies and the expansion of global operations into
Michael Harvey, Dean and Hearin Chair of Global Business, School of Business
Administration, University of Mississippi, USA (tel: +1 662 915 5820; e-mail: mharvey@
bus.olemiss.edu); Cheri Speier, Associate Professor, Michigan State University, Eli Broad
College of Business, East Lansing, MI 48824, USA; Milorad M. Novicevic, Assistant
Professor, University of Wisconsin @ La Crosse, La Crosse, Wisconsin, USA.
The International Journal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online © 2001 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190110063147
Harvey et al.: SGHR staf ng policies and practices
899
countries having high cultural, legal and geographic distance from the parent
organization.
Successful formulation and implementation of a corporate strategy for managing
global operations requires a commensurate strategy for managing international human
resources (Galbraith and Kozanjian, 1986; Bartlett and Ghoshal, 1992; Schuler et al.,
1993). Existing SGHRM frameworks describe policies and practices focused on
aligning the strategic initiatives of the organization with the development of global
managers while simultaneously managing the tension between integrating global
operations and achieving local responsiveness (Black et al., 1992; Schuler et al., 1993;
Taylor et al., 1996). This SGHRM framework includes ‘human resource management
issues, functions, and policies and practices that results from the strategic activities of
an MNC and that impact the international concerns and goals of those enterprises’
(Schuler et al., 1993). In particular, a SGHRM system is viewed ‘as a way for MNCs
to effectively manage and control their overseas operations’ (Taylor et al., 1996).
Existing SGHRM models (Schuler et al., 1993; Edstrom and Galbraith, 1977;
Heenan and Perlmutter, 1979; Adler and Ghadar, 1990; Milliman et al., 1991; Kobrin,
1991) emphasize all facets of human resources management that must be considered.
This article delves into these existing frameworks and focuses on the SGHRM policies
and practices related to strategic global human resource staf ng (SGHRM). Staf ng is
the primary practice that MNCs have used to co-ordinate and control their dispersed
global operations (Dowling and Schuler, 1990).
Existing SGHRM policies and practices include ‘determining and maintaining
staf ng levels that are an appropriate mix and ow of international assignees’ (Schuler
et al., 1993). Three strategic orientations have been espoused for addressing global
SGHRM:1 1) adaptive/polycentric, 2) exportive/ethnocentric and 3) integrative/regiocentric and geocentric (Ondrack, 1985; Taylor et al., 1996). First, an adaptive or
polycentric orientation has relied on recruiting primarily host-country nationals (HCNs)
(i.e. individuals from within the country) to manage the subsidiary operation. The
subsidiary adapts its human resource management (HRM) policies, philosophies and
personnel to the local environment with limited intervention or control from the parent
organization (Taylor et al., 1996).
Second, an exportive or ethnocentric orientation to international HRM staf ng has
also been pursued (Welch, 1994). This approach focuses on a full-scale transfer of the
parent organization’s HRM system to the subsidiary and makes use of parent-country
nationals (i.e. expatriates) for staf ng key positions in an overseas subsidiary. From an
SGHRM perspective, an exportive orientation facilitates organizational control while at
the same time providing important international developmental experience for promising managers of the parent organization (Black and Mendenhall, 1990; Schuler et al.,
1993; Tung, 1993).
Finally, an integrative orientation (Taylor et al., 1996) can be used where HRM
policies and practices transfer from the parent to the subsidiary and from the subsidiary
back to the parent organization. This orientation extends prior research on geocentric
approaches which focused on staf ng subsidiary locations by using the most quali ed
personnel regardless of nationality (Heenan and Perlmutter, 1979; Schuler et al., 1993).
The regio- and geocentric approach typically also includes the use of third-country
nationals (TCNs) – experienced managers from neither the parent nor the host country,
who have the skills to run subsidiary operations and often take on regional management
responsibilities (Schuler et al., 1993).
The integrative orientation prescribes a transfusion of knowledge between subsidiary
and parent locations that is not, however, typically facilitated by the assignment of
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The International Journal of Human Resource Management
TCNs. Similarly, HCNs are unfamiliar with informal aspects of parent-company
operations and are unable to share the informal knowledge and co-ordinate subsidiary
operations with the parent organization’s top management unless socialized in the
parent company. Finally, expatriates are brought in from the parent organization
primarily to control the overseas operation and less to in uence the HRM practices and
philosophies of the subsidiary. Therefore, it appears that existing candidate pools for
staf ng international management positions lack the breadth of socially networked
skills/knowledge to support an integrative staf ng orientation. We support the emphasis
on strategic development of a distinct candidate pool – inpatriates – as a mechanism for
achieving this integrative SGHRM orientation.
To some extent, the tacit concept of an inpatriate is already in place. Most researchers
do not differentiate inpatriates from expatriates because both candidate pools are
eventually assigned from the parent organization’s base. Though this outcome-based
approach may be appropriate for certain types of analyses, the expatriate/inpatriate
distinction is necessary for analyses with developmental and strategic rami cations.
However, a more fully developed conceptualization of inpatriation will be presented,
demonstrating the distinctive attributes and characteristics of an inpatriate when
compared to expatriates. Inpatriation is a formalized process of transferring and/or
hiring HCN/TCN managers into the parent organization of an MNC on a semipermanent to permanent basis (Harvey, 1993). Inpatriates can provide a unique global
frame of reference regarding the development of HRM strategy given their intimate
knowledge of subsidiary operations, markets and culture while at the same time having
been socialized into the culture of the parent organization (Harvey and Buckley, 1997).
Recent surveys of Fortune 100 companies suggest that US-based organizations are
increasingly using inpatriates in their operations (Solomon, 1995a, 1995b).
Each of the three SGHRM generic orientations – adaptive, exportive and integrative
– is employed within an MNC for managing global business operations to support or
drive the MNC corporate strategy. The exportive strategy (i.e. expatriation) has
received the majority of research attention because of its long history of practice and is
explored in more detail in the following section to obtain better insights into SGHRS
issues.
Limitations to the exportive (expatriate-centred) orientation in SGHRS
Historically, expatriates have typically been the preferred choice in staf ng strategy for
overseas assignments in United States-based MNCs because of their advanced
technical/business skills, their experience and informal knowledge in working within
the parent organization (Black et al., 1992; Marquardt and Engel, 1993; Dowling et al.,
1994; Harvey, 1996). Yet, the primary organizational appeal of expatriates has been in
the ability for the parent organization to exert control effectively through expatriate
assignments and achieve a high level of integration across global operations (Adler and
Ghadar, 1990; Black et al., 1992; Feldman and Thomas, 1993; Feldman and Thompson,
1993; Birdseye and Hill, 1995). However, there is ample evidence that expatriate
managers experience a high rate of failure because of dif culties in adjusting and
managing across cultural settings (e.g. Birdseye and Hill, 1995), increasing the cost of
control of subsidiaries.
In the United States, the failure rate of expatriates has been estimated as between 20
and 40 per cent (Mendenhall et al., 1987; Dowling et al., 1994; Harzing, 1995; Forster,
1997), resulting in signi cant direct (i.e. training, relocation, compensation) and indirect
costs (i.e. reduced service to customers, strained relations with home-country networks,
Harvey et al.: SGHR staf ng policies and practices
901
damage to the expatriate’s career) (Tung, 1987; Webb and Wright, 1996). Numerous
reasons have been advanced for the high failure rate of expatriates, including lack of
training, inadequate selection criteria, ineffective compensation programmes, ineffective leadership and family adjustment issues (Harvey, 1985; Black and Stephens,
1989; Harris, 1989; De Cieri et al., 1991; Haveman, 1992; Dowling et al., 1994).
In addition to increasing the rate of expatriation failure, family-related issues create
an additional problem for HRM managers – expatriation assignments are increasingly
refused, with an estimated 25 per cent of the top candidates turning down offers for
overseas relocation assignments (Barham and Devine, 1990; Noe and Barber, 1993;
Global, 1996). A primary driver of this increased refusal rate is the growing number of
dual-career couples (Solomon, 1994; Harvey, 1996, 1997b).
While expatriation refusal rates are increasing, there appears to be a growing need for
overseas managers in emerging markets throughout the world (Expatriate, 1997). Given
the signi cant population increases forecast in developing countries, it is not surprising
that new, untapped markets will emerge and increase the importance/necessity of
operating globally (World Population Prospects, 1995; World Resources, 1996).
However, many of these emerging markets are in countries (e.g. China, Russia, India,
Indonesia, Thailand, Malaysia, Turkey, Philippines, several Eastern European countries) that may represent dif cult relocation assignments for expatriate managers in
terms of cultural adjustment and quality of life.
The dif culties of managing operations in these emerging markets relate to lessdeveloped economic infrastructures, signi cant cultural distance from existing operations, higher personal risk (social, legal, political, safety, medical) and increased
business complexity that would be dif cult to comprehend and master during an
expatriate’s assignment. Furthermore, the greater the economic, legal and cultural
distance, the more likely the expatriate and his/her family will have dif culty in
acclimatizing to the new environment (Feldman and Thompson, 1993; Fish and Wood,
1997), accentuating expatriation failure rates (Webb and Wright, 1996). Therefore, if
the expatriation failure rate has been high and refusal rates are increasing, expatriation
failure/refusal rates are likely to increase in the future as opportunities for growth shift
to markets in developing countries.
Just as emerging markets are in uencing the strategic orientation of an MNC from a
multinational to a global involvement, the competitive business environment is
becoming dominantly characterized by cultural heterogeneity of focal markets. From an
SGHRM global perspective, management throughout the MNC, including the constituency of the executive board, should re ect the global, multi-cultural nature of the
business when pursuing a global strategy (Adler and Bartholomew, 1992; Vanderbroeck, 1992). Many Japanese, European and a few United States-based MNCs have
begun developing a multi-cultural corporate climate, management team and workforce
in their parent companies (Maruyama and Gakuin, 1992; Pechter, 1993; Tung, 1993;
Keno, 1994; The Economist, 1994). However, infusing the MNC with constituents from
around the globe demands a more proactive management of human resources than is
currently in place in most multinational organizations today (Moynihan, 1993; Caligiuri
and Stroh, 1995).
Theoretical grounding of SGHRS: an agency and expectancy theory perspective
SGHRS research has tended towards an acceptance of expatriation as the dominant
corporate international human resource strategy utilized by United States-based MNCs
(Scullion, 1991; Ali and Camp, 1996). Given the increasing importance of markets in
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The International Journal of Human Resource Management
developing countries, expatriation failure/refusal rates and the strategic need for multicultural management teams, the need to identify a complementary set of SGHRS
inpatriate-centred policies and practices is essential. However, it is critical that this
examination has both intuitive and theoretical appeal. A theoretical approach to
SGHRM issues is particularly relevant in view of Bacharach’s (1989) recommendation
that a theoretical foundation is needed in the areas of HRM and strategy. Therefore, we
examine SGHRM policies and practices from a combined agency and expectancy
theory perspective.
Agency theory has been applied to work domains where tasks are highly
unstructured, outcomes are dif cult to evaluate and agents enjoy a great deal of
discretion regarding their activities (Eisenhardt, 1988; Tosi and Gomez-Mejia, 1989;
Gomez-Mejia and Balkan, 1992). The relationship between a parent organization and
subsidiary domains has a principal-agent structure (Nohria and Ghoshal, 1994). The
agency problem in the headquarters-subsidiary relationship increases as the subsidiary’s
strategic autonomy and lack of commitment to the goals of the parent organization
increase (Roth and O’Donnell, 1996). Therefore, agency theory provides an appropriate
backdrop for examining the SGHRM staf ng problem of monitoring the headquarters–
subsidiary agency relationship (Wright and McMahan, 1992).
Agency theory provides a theoretical grounding to examine how organizations might
select and structure contracts with agents. However, agency theory is also concerned
with the levels and effect of monitoring. Roth and O’Donnell speci cally propose
that:
future research needs to incorporate other mechanisms by which the agency problem can
be managed, in addition to compensation strategy of the foreign subsidiary. Mechanisms
such as the use of expatriates, third country nationals, or local nationals with extensive
headquarters work experience, as well as management development programs providing
international management rotation, may provide corporate socialization that can in turn
in uence the extent of the agency problem in the headquarters–subsidiary relationship.
(Roth and O’Donnell 1996: 700)
Agency theory, however, provides limited insights into how an assignee selected to
monitor the headquarters–subsidiary relationship might respond to the offered assignment role. Therefore, building upon the agency theory perspective to SGHRS issues, we
utilize expectancy theory to more fully examine an assignee’s motivation in accepting
an assignment to monitor the agency contract (Eisenhardt, 1989).
An agency theory perspective
Agency theory has developed into two interdependent focuses – a theory of human
behaviour (Jensen and Meckling, 1976; Eisenhardt, 1988) or a theory of performance
outcome (Nilakant and Rao, 1994) – both with common monitoring problems. In this
article, we focus on the agency relationship between a parent and subsidiary location
and the resulting international assignee pools that are likely to monitor the subsidiary’s
behaviour and performance under their agency contracts most ef ciently. There are two
underlying premises behind agency theory that have important rami cations for
SGHRM: 1) information asymmetry between the parent and subsidiary location is likely
to exist (Gomez-Mejia and Balkan, 1992); and 2) the goals established for the parent
and subsidiary location may be incongruent (Roth and Ricks, 1994).
Information asymmetry occurs when there is a signi cant difference in the
information needed/available between a parent and subsidiary location. This difference
can be related to a subsidiary’s increased strategic autonomy (Rajagopolan and
Harvey et al.: SGHR staf ng policies and practices
903
Finkelstein, 1992; Birkinshaw and Fry, 1998) or because there is a signi cant cultural
distance between the headquarters and the subsidiary regarding performance goals
(Roth and O’Donnell, 1996). Selection of an overseas assignee is important in these
situations, as monitoring the subsidiary’s behaviour and performance is ineffective
when the principal does not have suf cient knowledge to assess the subsidiary’s
decisions or other outcomes (Tosi and Gomez-Mejia, 1989; Conlon and Parks, 1990).
Therefore, the principal must select an overseas assignee from a candidate pool to
whom monitoring authority can be delegated (Davis et al., 1997).
In addition to information asymmetry, the degree to which goal congruence exists
regarding performance expectations or the relationship between a speci c event and the
commensurate performance between a parent and subsidiary also in uences the need
for monitoring (Nilakant and Rao, 1994). An organizational goal is de ned as ‘a desired
state of affairs which the organization attempts to realize’ as espoused by top
management (Etzioni, 1964; Roth and Ricks, 1994). The parent organization may have
various goal con gurations, in terms of their scope and breadth, with the emphasis
ranging from the concentrated (single) goal con guration to the dispersed (comprehensive, multiple) goal con guration. Goal congruence relates to the commitment of the
subsidiary’s top management to the goal con guration espoused by the parent
organization’s top management. Goal incongruence may arise in the headquarters–
subsidiary relationship because the subsidiary may not consistently support the parent
organization’s resource requirements ‘to maintain the level of organizational slack
necessary to pursue multiple goals’ (Roth and Ricks, 1994: 118) or when the
subsidiary’s management undertakes an autonomous initiative in its external network
using its own organizational slack (Birkinshaw and Fry, 1998).
Therefore, these two sources of agency problem (asymmetry in knowledge about
effort-outcome relationship and goal congruence about effort–outcome standards) can
be combined to produce four different types of ef cient monitoring options that can be
applied to SGHRM staf ng choices (Figure 1). More speci cally, when a parent
company possesses complete knowledge about a subsidiary setting, there is low
information asymmetry and the parent can more effectively monitor subsidiary
performance. When parent and subsidiary organizations have congruent goals, there is
limited goal con ict between the parent and subsidiary and the parent can more directly
prescribe standards and activities to the subsidiary.
When the principal–agent relationship is comprised of low information asymmetry
and high goal congruence, agency theory predicts that the selection of a local national
(LN) results in the most ef cient monitoring practice for the agency contract. Given the
existing goal congruency, speci c goals can be clearly established and communicated
from the parent to the subsidiary resulting in shared understanding. Similarly, the parent
organization can assess the actions and outcomes of the subsidiary location because of
Goal congruency
Asymmetry in knowledge
Low
High
Low
Third-country nationals
Local nationals
High
Expatriates
Inpatriates
Figure 1 Candidate pool preferences based on agency theory predictions regarding parentsubsidiary relationship
904
The International Journal of Human Resource Management
the common set of knowledge/information shared between the two organizations. Given
the goal congruence and ease of monitoring, the parent location can form the most
ef cient contract by focusing its monitoring choice on the least expensive candidate
pool available – relying heavily on LNs (Heenan and Perlmutter, 1979; Schuler et al.,
1993; Taylor et al., 1996).
P1 :
When goal congruence is high and information asymmetry is low between a
parent and subsidiary, selection of managers for foreign assignments should be
from a local national candidate pool.
Alternatively, when the principal–agent relationship is comprised of low information
asymmetry and low goal congruence between the parent and the subsidiary, the
overseas staf ng selection decision should be primarily guided by goal incongruence
resolution considerations. When goal congruence is low, the parent location needs to
exert control over the subsidiary to ensure that speci c initiatives are carried out.
Unfortunately, this often brings ill-feeling towards the manager who has been charged
with enacting these decisions whether that manager comes from the subsidiary or from
the parent organization. Therefore, agency theory predicts that, in this situation, the
most ef cient monitoring of the agency contract would be constructed with assignees in
the third-country national (TCN) candidate pool. TCNs have been identi ed as effective
mediators of goal con ict including initiatives such as restructuring, downsizing and
mergers/acquisitions that cannot be resolved effectively and impartially by either local
nationals (LNs) or expatriates (Moynihan, 1993). Furthermore, the TCN manager would
take the brunt of the negative feelings from the subsidiary workforce, minimizing
damage to the relationship between the parent and subsidiary locations. Finally, TCNs
are less costly than expatriates, making this candidate pool more appealing from a
contract monitoring ef ciency perspective in terms of minimizing the monitoring
costs.
P2 :
When goal congruence and information asymmetry are low between a parent
and subsidiary, selection of managers for foreign assignments should be from a
third-country national candidate pool.
The third distinct principal–agent relationship occurs when there is high information
asymmetry between the parent and subsidiary while at the same time there is signi cant
incongruence in the strategic goals between each location. The parent company will be
guided primarily by a desire to exert relational control over the subsidiary operation,
ensuring that the goals of the parent organization take precedence. At the same time,
there are signi cant differences in the information and knowledge held between the
parent and subsidiary locations. The parent will be unable to monitor the subsidiary or
trust that goals will be achieved with the parent location’s issues given priority without
placing an individual knowledgeable about the parent company into the subsidiary.
Therefore, the most ef cient monitoring of the agency contract results in heavy reliance
on the expatriate candidate pool (Hailey, 1992).
P3 :
When goal congruence is low and information asymmetry is high between a
parent and subsidiary, selection of managers for foreign assignments should be
from an expatriate candidate pool.
The nal principal–agent relationship involves situations where there is high
information asymmetry between the parent organization and the subsidiary yet there is
Harvey et al.: SGHR staf ng policies and practices
905
high goal congruence between the locations. In this situation, the parent company will
likely be guided by a desire to better integrate its diverse global operations while at the
same time being highly responsive to the marketplace. Because of the high information
asymmetry between the subsidiary and parent, it is critical to select an overseas
manager who can report back to the parent location the nuances and differences in the
two locations while at the same time having the information and social knowledge to
communicate with locals in the subsidiary location. This duality calls for an integrative
SIHRS orientation resulting in a preferred selection of inpatriates for these assignments
(Harvey, 1993).
P4 :
When goal congruence and information asymmetry are high between a parent
and subsidiary, selection of managers for foreign assignments should be from
an inpatriate candidate pool.
Speci c to SGHRM, developing inpatriates is a process of institutionalized
socialization (Harvey, 1997a). Inpatriation develops the desired characteristics of
personnel who have been socialized into the parent rm and, therefore, re ect its culture
and norms (Pucnik and Katz, 1986) while having the social knowledge (Sohn, 1994) of
local nationals and the subsidiary’s environment. This combination results in personnel
who are capable of interpreting the complexities of speci c global situations in terms
the parent company’s top management can understand and respond to.
Given the existence of information asymmetry and goal congruence between parent
and subsidiary organizations, agency theory provides an appropriate frame from which
to assess SGHRM issues. However, it is important to examine more fully the cultural
and motivational robustness of the existing candidate pools in light of: 1) shifting
towards culturally distant markets that are in the process of globalizing business
operations; and 2) motivational challenges to existing candidate pools to accept these
assignments. The cultural and motivational robustness of candidate pools is a relevant
variable that may in uence the agency costs because of its in uence on candidate
refusal rates and failure in foreign assignments.
Uncertainty in the SGHRM context today and in the future
From the inception of corporate internationalization, the location of subsidiary
operations outside home markets has tended towards expansion into countries that have
similar cultural/economic/legal attributes (e.g. cultural distance, one developed market
to another, similar institutionalized values regarding acceptance of a product) as the
parent organization. As populations in developing countries increase and new market
opportunities emerge, corporations will gravitate to these new markets, increasing the
cultural distance between the parent and emerging subsidiary locations. Cultural
distance is determined by the degree to which there are differences in the cultural
characteristics between the headquarters and subsidiary organizations/markets (Erez
and Earley, 1993; Roth and O’Donnell, 1996). As cultural distance increases, the
information asymmetry associated with the operations, markets, personnel, etc.,
increases (Gomez-Mejia and Balkin, 1992), placing increased importance on relational
monitoring, (i.e. emphasizing staf ng from expatriate and inpatriate candidate
pools).
P5 :
The greater the cultural distance between the parent and subsidiary location,
selection of managers for foreign assignments should be from the expatriate or
inpatriate candidate pool.
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The International Journal of Human Resource Management
A second condition in uencing SGHRM strategy is the strategic importance of
subsidiary operations to the parent organization. Many organizations are evolving from
a multinational to a global environment, resulting in balancing the needs of global
rationalization (e.g. subsidiary is a single part of a worldwide system) and lateral
centralization (e.g. subsidiary has world-wide responsibility for a speci c product or
product line) (Roth and O’Donnell, 1996). In a multinational environment, the parent
organization holds ‘the decision-making authority’ and host-country operations are seen
as tangential or subordinate in the hierarchical structure. As a global strategic
orientation evolves, decision-making authority is more dispersed and thereby integrated
across operating units, resulting in greater goal congruency. Therefore, the parent
organization focuses less on exerting controls but more on co-ordinating activities
between operations.
P6 :
As operational strategies move from multinational to global, increasing goal
congruency between locations, selection of managers for foreign assignments
should be from the local national or inpatriate candidate pool.
Finally, organizations may evolve to global strategies while at the same time
operating subsidiaries in developing countries to better penetrate emerging market
opportunities. In these situations, integrating the subsidiary into the existing network of
operations is important, yet the cultural distance between the subsidiary and parent is
likely to be high, resulting in high goal congruency and high information asymmetry.
As the subsidiary operation becomes more tightly intertwined with its sister locations,
it may take on a role of lateral centralization within the network of operations,
increasing the information asymmetry to even a greater extent. The parent organization
will select a foreign manager from a candidate pool who can facilitate integration while,
at the same time, having an understanding of the local cultural/business/government
surroundings.
P7 :
As operational strategies move from multinational to global and subsidiaries are
located in countries with high cultural distance, selection of managers for
foreign assignments should be from an inpatriate candidate pool.
Assignees’ motivation to accept the monitoring assignment: an expectancy
theory perspective
Agency theory provides a perspective on identifying the most ef cient candidate pool
from which to select overseas managers. However, there is an implicit assumption that
managers in each of the four candidate pools would be equally motivated in accepting
a monitoring assignment. If there are speci c candidate pools that (or conditions in
which speci c candidate pools) would have little motivation to accept an assignment,
the cost of nding a speci c overseas manager who will accept the assignment will go
up signi cantly, increasing monitoring costs. If this cost inef ciency were built into the
candidate pool selection process, an alternative candidate pool might actually result in
more cost-ef cient contract monitoring. Therefore, it is a necessity to examine also a
motivational theory, expectancy theory, describing and explaining factors in uencing
an assignee’s motivation to accept the assignment.
The underlying focus of expectancy theory is on valence, instrumentality and
expectancy (VIE) factors in uencing individual motivational effort (Vroom, 1964).
Valence is a preference for or attraction towards speci c outcomes such as performance
( rst-order outcome) or rewards (second-order outcome). Individuals have a probabil-
Harvey et al.: SGHR staf ng policies and practices
907
istic belief that a given amount of effort will lead to a speci c level of performance (i.e.
expectancy) and that a given level of performance will lead to a speci c reward (i.e.
instrumentality). Motivation to exert effort (e.g. accept an assignment) is the interaction
of the valences between expectancy and instrumentality (Nadler and Lawler, 1977;
Porter and Lawler, 1968; Vroom, 1964). Therefore, individuals must both positively
value the outcomes and believe the outcomes will occur based on their effort in order
to be motivated to exert effort in performing a given task or job.
Porter and Lawler (1968) have added some important enhancements regarding the
motivational effort predicted by expectancy theory that appear to be important here. For
example, they suggest that the level of reward an individual can attain from his/her
performance will need to be perceived as both equitable and within the reward structure
of the institution. Therefore, if the reward infrastructure does not provide an equitable
reward for a given level of performance, the agent would not have suf cient motivation
for exerting effort.
Applying an expectancy theory perspective to SGHRM
When employing a multinational strategy, a parent organization has increased its global
exposure, yet maintains strong controls over subsidiary operations (Adler and Ghadar,
1990). This concern primarily for control encourages the parent organization to select
overseas managers that are most likely to make decisions in the best interest of the
parent organization and can most effectively integrate the subsidiary operations into the
parent ‘way of thinking’. Currently, the ‘best’ monitoring candidates are likely to be
selected from an expatriate pool as opposed to host-country or third-country nationals
(Dowling et al., 1994). Whereas overseas managers from the expatriate pool know and
understand the parent organization, neither host-country nationals nor third-country
nationals, who are not socialized in the parent company, have this knowledge.
Furthermore, host-country nationals and third-country nationals do not have existing
informal relationships with parent organization management and are less likely to
communicate problems or make signi cant changes on behalf of the parent organization
(Marquardt and Engel, 1993).
Therefore, the parent organization must structure motivating incentives that an
expatriate will perceive as resulting in long-term positive outcomes as well as having
short-term rewards. Historically, expatriate assignments have been structured as
medium-term (three to ve years) with somewhat de ned career progression upon
returning to the parent organization (e.g. promotion to a job position one level higher in
the management hierarchy). In addition, many parent organizations use overseas
assignments as a developmental prerequisite for executive management team consideration (Marquardt and Engel, 1993).
Given the parent organization’s ability to structure a contract that is likely to provide
nancial and career-path motivation for an expatriate, how is he/she likely to respond?
The magnitude of perceived risk may hinge on the potential for family stress and sunk
costs based on the economic and cultural distance of the host country from the parent
organization. If the expatriation assignment is in a country with low cultural distance
from his/her own, language barriers pose less of a problem, educational opportunities
for children are typically available, and the amenities that the expatriate and his/her
family are used to are frequently available. Additionally, the potential for nding/
creating an alternative opportunity for a working spouse is more likely to exist. This
does not suggest that the transition will be easy and that all the manager’s and family’s
wants and needs will be readily available. However, there is typically an infrastructure
The International Journal of Human Resource Management
Figure 2 SGHRM research model
908
Harvey et al.: SGHR staf ng policies and practices
909
in place and the expatriate is likely to have some comfort that he/she and family can
make the adjustment. Therefore, a potential expatriate who is interested in long-term
career progression within the parent organization is likely to perceive an overseas
assignment in a country with minimal cultural distance as appealing, with manageable
acculturation risks (see Figure 2).
P8 :
In overseas assignments where there is low cultural distance between the parent
and subsidiary, managers selected from an expatriate pool are likely to have
suf cient motivation to accept the overseas assignment.
Alternatively, a potential expatriate may reach a different conclusion when assessing
an overseas assignment in a country where there is a high cultural and economic
distance from his/her own. Although the same positive career incentives exist, the
hardship for the family may be untenable. Language barriers, more stark cultural
differences and educational and safety concerns are likely to make a family move
dif cult, if not impossible. Parent organizations may target single assignees or married
assignees without children; however, this reduces the possible expatriate pool
signi cantly. Additionally, the cultural barriers make expatriation success far more
dif cult in these environments and are likely to result in an assignment with less overall
appeal.
P9 :
In overseas assignments where there is high cultural distance between the
parent and subsidiary, managers selected from an expatriate pool are likely to
have insuf cient motivation to accept the overseas assignment.
If expatriates have low motivation to accept overseas assignments in locations with
signi cant cultural distance, what do parent organizations wanting to exert monitoring
control over subsidiaries do? Although the parent’s ability to exert the kind of control
desired and perhaps needed is reduced signi cantly (Dowling et al., 1994; Korbin,
1988), host-country and third-country nationals could be considered for assignments in
countries with high cultural distance. A host/third-country national who speaks the
language, understands the cultural and political system, and is often a member of the
political élite is likely to be more effective than an expatriate (Korbin, 1988; Tung and
Havlovic, 1996). However, the parent organization’s ability to exert effective outcome,
behaviour or relational control is very limited.
Therefore, when the parent organization is following a multinational strategy,
staf ng overseas operations in countries with signi cant cultural distance is likely to be
problematic. The preferred control mechanism agents – expatriates – have little
motivation to accept these assignments. Given the high cultural distance between the
parent organization and assignments in these countries, as well as important family
needs, it appears that the possibility of increasing the motivation of potential expatriate
managers to accept these assignments is very low. Alternatively, host-country/thirdcountry nationals can be selected for these positions; however, they have limited
relational knowledge of the parent organization and are unlikely to provide a reliable
monitoring role or to act as a proactive conduit back to the parent. This disjunction
between these candidate pools and the apparent need to satisfy both the control needs
of the parent and motivational needs of the overseas manager suggests that a
complementary relational staf ng strategy – inpatriation – is needed. Staf ng overseas
management positions of this nature with inpatriates enables the parent organization to
select and socialize host/third-country nationals in such a way that greater relational
control can be exerted from the parent organization.
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The International Journal of Human Resource Management
P10:
In overseas assignments where there is high cultural distance between the
parent and subsidiary, foreign managers selected from an inpatriate pool are
likely to have suf cient motivation to accept the overseas assignment.
P11:
In overseas assignments where there is high cultural distance between the
parent and subsidiary, foreign managers selected from an inpatriate pool are
likely to result in greater assignment success rates than expatriate managers.
As the management of operations evolves and takes on a more global perspective, the
primary staf ng goals involve increasing co-ordination and integration among operations (Adler and Ghadar, 1990). Speci c to a HRM perspective, a cross-cultural
management team needs to be developed to manage effectively in a truly global context
(Wiersema and Bentel, 1992). Therefore, a parent organization operating with a global
strategy cannot afford a strong control orientation as created by the drop-in/pull-out
‘paratrooper’ nature of staf ng assignments that most multinationals use. Instead, the
SGHRS requires the selection of overseas managers from candidate pools that will
exchange information between subsidiary locations and the parent organization in a
highly effective and actionable manner.
Expatriates can continue to be identi ed for assignments in countries where there is
low cultural distance. However, if the parent organization’s goal is one of integration
instead of control of the subsidiary’s lateral centralization, it may be more dif cult for
‘a foreigner’ to gain an entrée and enable/in uence integration at the subsidiary
location. Although host-country and third-country nationals are likely to be highly
motivated to accept these positions, they are also unlikely to be effective in this context,
as they are perceived as outsiders who do not understand the informal aspects of the
parent organization and its network of operations. This is likely to result in other
managers diminishing the overseas manager’s stature or credibility regarding the
information and decision making exerted in the subsidiary location (Dowling et al.,
1994). An inpatriate, however, is likely to bridge both these issues as they have been
inculcated into the management of the corporation (e.g. have credibility) while at the
same time they have local knowledge of the subsidiary operation (e.g. able to exert
in uence).
SGHRM in global organizations: practical implications of inpatriation
Developing a cognitively multi-cultural, international workforce is considered to be one
of the primary requisites of successfully competing in the global marketplace
(Rhinesmith, 1993; Vanderbroeck, 1992). Operating across cultures effectively will be
a critical success factor for managers in the global marketplace. In particular, the higher
the extent of an MNC’s involvement in globalizing its activities, the greater the need to
socialize the global talent for relational control of its dispersed operations. Therefore,
MNCs must develop new ways to identify, attract, cultivate and retain international
executive talent (Moynihan, 1993; Solomon, 1995a). Today, most organizations that
have effectively learned to exploit global management labour pools rely on socialized
host- and third-country nationals, promoting the most promising to the parent
organization (Moynihan, 1993). On an ad hoc basis, this is likely to facilitate locating
and retaining a small number of quali ed multi-cultural managers. However, the need
for quali ed talent across all levels of skills in the organizational hierarchy (e.g. top
management through supervisory managers) will persist for the foreseeable future.
Creativity in nding a suf cient pool of quali ed managers who can effectively manage
across cultures and functions becomes the primary challenge for international human
Harvey et al.: SGHR staf ng policies and practices
911
resource managers and requires a far more proactive strategy than ad hoc promotion of
‘promising’ local and third-country nationals.
Revisiting the agency/expectancy theory framework, inpatriation may be a strategic
international staf ng orientation that can address the control/motivation imbalance
created by the increasing use of global strategies and signi cance of emerging markets
in culturally distant countries. As noted in our prior discussion, host- and third-country
nationals are likely to have greater motivation for accepting assignments in developing
countries. The inability of the parent organization to employ relational control over
these managers when pursuing a multinational strategy or to integrate them ef ciently
into the operations network when pursuing a global strategy is problematic for
appropriate global strategic staf ng choices. However, a proactive staf ng orientation
to inpatriation goes beyond HRM functional selection of host- and third-country
nationals for overseas assignments. Instead, inpatriation focuses on embedding hostand third-country nationals into the organization with a de ned career-path and locating
them at the parent organization and/or regionally signi cant subsidiaries to facilitate
learning of the culture, values and decision processes. This proactive strategy helps
ensure, over time, that these individuals are both able to exert informal monitoring
controls on subsidiaries and to integrate their experiences/abilities into the parent
organization.
Inpatriation also aligns with the control/motivational issues espoused by agency/
expectancy theory as examined over time. In attempting to construct the most ef cient
monitoring of the agency contract, strengthening the parent organization/overseas
manager relationship over time improves overall ef ciency of control and coordination. Uncertainty contributing to information asymmetry is reduced, dysfunctional behaviour contributing to goal incongruence is identi ed and thus monitoring
costs are minimized. With respect to an expatriation strategy, these individuals are
typically used for a single assignment and ‘have earned their stripes’. Therefore, each
time an overseas assignment needs to be lled, there is a great deal of uncertainty
regarding the turnover behaviour and, therefore, monitoring success of the expatriate.
Alternatively, over time an inpatriate is selected for a sequence of overseas
assignments. This repeated selection process allows the parent organization to reduce
uncertainty, facilitating the development of an ef cient monitoring of the agency
contract and effective management of overseas operations.
Clearly, there is a signi cant role that inpatriate mangers can play within today’s
global business context. However, creating or formalizing the role of an inpatriate
requires substantial globalization of existing HRM practices and policies. New or
modi ed methods for selection, recruitment, development and retention of inpatriate
managers must be examined. In order to bene t fully from the climate of multiculturalism created by the inpatriate, the parent organization must ensure that inpatriates
are legitimized as a part of the core management team (Harvey, 1997a; Harvey and
Miceli, forthcoming) necessitating cultural acceptance of an ‘outsider’ within the parent
organization. By importing their subtle cultural input, the organization has undertaken
the rst strategic step in developing a multi-cultural management group and global
learning organization, which is needed to compete in the global market (Hofstede,
1984; McBride, 1992; Nemetz and Christensen, 1996; McMillen et al., 1997).
In conclusion, there is ample support for the notion that current SGHRS practices are
lacking, particularly in light of changes in the globalization of business and new market
opportunities in culturally distant countries. Formalizing the development of an
inpatriate manager candidate pool enables an organization to take a proactive step in
managing the SGHR staf ng needs in today’s and tomorrow’s global business
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The International Journal of Human Resource Management
environment. At the same time, it opens the door to a new set of research issues
assessing the policies and practices needed for the effective and feasible recruiting,
selection, development and retention of the inpatriate candidate pool.
Note
1 The three strategies have been given different labels by different authors. As noted in the Taylor
et al. (1996) manuscript, the concepts espoused are comparable. We have chosen to use
adaptive, exportive and integrative and note in the text their relationships with prior
research.
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SWIMMING AGAINST THE TIDE: OUTWARD STAFFING
FLOWS FROM MULTINATIONAL SUBSIDIARIES
Early Version of paper eventually published in Human Resource
Management, full citation as follows:
Collings, D., McDonnell, A., Gunnigle, P. & Lavelle, J. (2010) “Swimming against the tide:
Outward staffing flows from multinational subsidiaries”, Human Resource Management 49 (4), 575598.
Comment [Editor1]: Please indicate
corresponding author.
David G. Collings
J.E. Cairnes School of Business & Economics.
NUI Galway,
University Road,
Galway,
Ireland.
david.collings@nuigalway.ie
Tel. +35391495385
Anthony McDonnell
Centre for Institutional and Organisational Studies,
Faculty of Business and Law,
University of Newcastle,
Callaghan,
NSW 2308,
Australia.
anthony.mcdonnell@newcastle.edu.au
Patrick Gunnigle & Jonathan Lavelle
Kemmy Business School,
University of Limerick,
National Technological Park,
Limerick,
Ireland.
patrick.gunnigle@ul.ie; jonathan.lavelle@ul.ie
1
Formatted: Left
2
Abstract
Studying the flows of parent country nationals in multinational enterprises (MNEs) to
subsidiary operations has a relatively long tradition. Studying flows of subsidiary employees
to other subsidiaries, as third country nationals, and to the corporate headquarters, as
inpatriates, however, has empirically, much less pedigree. Drawing on a large-scale empirical
study of MNEs in Ireland, this paper provides a benchmark of outward flows of international
assignees from the Irish subsidiaries of foreign owned MNEs to both corporate headquarters
and other worldwide operations. Building on insights from the resource-based view and neoinstitutional theory, we develop and test a theoretical model to explain outward staffing flows.
The results show that almost half of all MNEs use some form of outward staffing flows from
their Irish operations. Although the impact of specific variables in explaining interorganization variation differs between the utilization of inpatriate and third country national
assignments, overall we find that a number of headquarters, subsidiary, structural, and human
resource systems factors emerge as strong predictors of outward staffing flows.
Key words: global staffing, inpatriates, third country nationals, international assignments,
resource-based view, institutional theory
3
Introduction
While the study of global staffing has a long tradition (Collings, Scullion & Dowling
et al., 2009; Harvey & Moeller, 2009), these studies have focused heavily on flows of parent
country nationals (PCNs) from the headquarters (HQ) to subsidiary operations (Edstrom &
Galbraith, 1977; Harzing, 2001; Scullion, 1994; Tan & Mahoney, 2006). This generally
presented as an alternative to host country nationals (HCNs) in staffing subsidiary operations.
This literature resonates with conceptualizations of ethnocentric (Perlmutter, 1969) or
centralized (Bartlett & Ghoshal, 1989) orientations towards multinational management,
reflecting the perceived superiority of PCNs over their local counterparts. Recent research,
however, has challenged tHowever, this limited perspectiveand the changing topography of
the global business environment over recent decades has emphasized the limited utility of
unidirectional staffing policies (Harvey, Speier & Novecevic, 2001; Schuler & Tarique, 2007)
and forced researchers and practitioners alike to re-evaluate such policies. Reflecting on this
shifting emphasis, Tarique and Schuler (2008) have argued that this represents a changing
focus from one driven primarily by the parent country to one more appropriately described as
‘global’.
In response, an emerging body of literature has directly addressed staffing flows from
subsidiaries to the HQ. In this regard, following Harvey, Novecevic, and Speier (2000), we
use the term inpatriate to represent employees from multinational subsidiaries transferred to
the HQ on a permanent or semi-permanent basis. Much of the extant research in this area has
been conceptual in nature (Harvey, Buckley, & Fung, 2005; Harvey et al., 2000) and there has
been relatively little empirical work (for exceptions, see Harvey & Miceli, 1999; Peterson,
2003; Reiche, 2006; Tharenou & Harvey, 2006). While these studies have considered issues
including inter alia, acculturation issues of inpatriate managers (Harvey & Miceli, 1999), and
the purposes and critical success factors of such assignments (Reiche, 2006), there is little, if
4
any, available evidence on the extent to which MNEs actually utilize inpatriate assignments1
(cf. Tharenou & Harvey, 2006). Indeed, a recent case based study of US MNEs in Ireland
concluded “while the potential benefits of inpatriation for MNEs are relatively well
established in the academic literature…it appears that its [inpatriation] application in practice
appears limited” (Collings, Morley & Gunnigle., 2008: 210), suggesting limited use of such
assignments in practice.
A second blind spot has been the limited focus on third country nationals (TCNs),
defined as nationals of one country, working in a second country for a MNE headquartered in
a third country (e.g. a US-owned MNE sends an employee from its Irish operations on
assignment to its Singaporean operation). While some recent conceptual contributions have
recognised the significance of TCNs as a staffing option (Gong, 2003; Tarique, Schuler &
Gong, 2006), there has been limited work on the actual extent to which MNEs utilize TCNs in
staffing global operations (for exceptions see Collings et al., 2008; Tungli & Peiperl, 2009).
Apposite to this, it has been argued that TCNs may represent an important means by which
MNEs can enlarge their managerial pool with the experiences to undertake international roles
(Collings et al., 2008: 209). However, this potential has hitherto remained underexplored in
the literature.
The lack of evidence on these aspects of global staffing is significant for two key
reasons. Firstly, Harvey, Speier and Novicevic (2001) argue that changes in the globalization
process may render traditional and unidirectional models of global staffing less appropriate
for organizations operating in the global sphere. With the increasing location of foreign direct
investment (FDI) in countries such as China, India and Central and Eastern Europe, the
requirements of managers with both the skills and desire to operate in these locations may
force MNEs to re-evaluate their staffing options (see also Scullion, Collings & Gunnigle,
2007; Tarique & Schuler, 2008). Second, it has been argued that the context for the
5
management of the traditional PCN international assignment has altered significantly, leading
in some quarters to a fundamental reassessment of the contribution of, and prospects for, the
international assignment as conventionally understood and an exploration of alternatives to
the traditional international assignment (Collings et al., 2007).
While much recent debate has focused on alternative forms of international
assignments such as short-term assignments, international business travel and virtual
assignments, we argue that inpatriation and the increased use of TCNs in global staffing
represent viable alternatives to potential over-reliance on traditional PCN assignments
(Tarique & Schuler, 2008). Hence, further delineation of the actual utilisation of TCNs and
inpatriation in MNE staffing and the factors which explain their deployment represents a
valuable contribution to the literature. It will aid managers in understanding the circumstances
in which inpatriates and TCNs might represent an appropriate staffing option. Given that the
nature of inpatriate and TCN assignments differ significantly from traditional PCN
expatriates, it is important for practitioners to have a clearerunderstanding of the
characteristics of these assignment options more clearly.
Similarly, given the limited empirical evidence on both inpatriates and TCNs, the
study also represents a valuable contribution to the academic literature in terms of delineating
the factors which explain inter-organizational variation in outward staffing flows and will
provide a solid base for future research in the area.
In exploring the nature of outward staffing flows from foreign owned MNE
subsidiaries in Ireland, we develop a model drawing on the resource based view of the firm
(see Barney, 1991) and neo-institutional theory (DiMaggio and Powell, 1983; Meyer and
Rowan, 1977) which we subsequently empirically test. This model includes headquarter
factors (e.g. country of origin), subsidiary factors (e.g. method of formation), structural
factors (e.g. international integration) and HR systems factors (e.g. human resource
6
information systems). We begin with a brief summary on the inpatriation and TCN literature
before setting out our theoretical model and describing the methodology employed. After
detailing our empirical results, we conclude by discussing the implications of our findings.
Inpatriates
Inpatriates are significantly different from other forms of international assignments 2.
At a basic level, they can be differentiated by virtue of the fact that they involve the transfer
of employees from a foreign subsidiary to the HQ of an MNE but there are further and more
complex differences. There has in recent years been some debate as to the usefulness of the
term inpatriate. Some have been critical of the term, arguing that it refers to another category
of expatriate staff and represents an ethnocentric view in firms from large and dominant
economies (Torbiorn, 2005). Others (Dowling, Festing & Engle, 2008) illustrate the
confusion associated with differing definitions of inpatriation and question the value added by
the term. However, we contend that that the fact that the role and experience of inpatriates is
likely to be significantly different to other categories of international assignees and therefore
the term has conceptual merit. Reiche (2006) similarly recognises the failure to differentiate
between inpatriates and expatriates as distinct categories of staff and hence the idiosyncrasies
of the former group are ignored.
It has been further argued that the potential impact of inpatriate managers could be
more significant than their PCN counterparts since much of the high value added activity of
MNEs, such as research and development, upper management team tiers, tends to be retained
in the home country. In this regard Scullion and Collings (2006) synthesize some of the key
opportunities arising from inpatriate assignments. Such assignments can facilitate the
development of a multicultural perspective at the MNE HQ. As part of a global network, such
assignees can act as “linking pins” between foreign subsidiaries and HQ. Such a boundary
7
spanning role can aid the MNE in effectively competing globally (Harvey et al., 1999).
Inpatriation also facilitates the embedding of employees from outside of the MNE’s country
of origin into the organization, while potentially providing them with defined career paths,
and facilitating the learning of organizational cultures, values and decision making processes
(Harvey et al., 2001). Similarly, the return of inpatriates to their home country on completion
of their assignment can aid the localization process, which is an increasingly important
strategic objective for MNEs (Evans, Pucik & Barsoux, 2002). Such returning inpatriates
should have a greater appreciation of the subsidiary’s role within the MNE’s global network
and a more developed global mindset.
Formatted: Left
Third Country Nationals
Although there have been a number of recent contributions (cf. Collings et al., 2008;
Gong, 2003; Tarique & Schuler, 2008), there is little extant literature on the use of TCNs in
staffing MNEs. Nonetheless, the literature points to some potential benefits associated with
such assignees. TCNs can be socialized effectively into the corporation and generally are
considered to represent a lower cost option, in terms of salary and benefits, than their PCN
counterparts. Furthermore, they are potentially better informed about the host country
environment than PCNs, and might reduce language barriers when they are transferred from a
country that shares a language with the subsidiary (Dowling et al., 2008). Finally, TCNs may
be more willing to accept an international assignment than their PCN counterparts due to
more limited labor market opportunities in their country of origin, hence expanding the
recruitment pool within the MNE (see also Tarique & Schuler, 2008). Briscoe, Schuler, and
Claus (2008) argued that TCNs also are more likely to be deployed in situations where there
is relatively free movement of people from country to country, such as the European Union.
8
Thus TCNs can represent an important staffing option for MNEs and merit study in their own
right.
Theoretical Framework
In developing the theoretical framework that underpins the current study, we draw on
the resource-based view (RBV) of the firm (see Barney, 1986, 1991; Wernerfelt, 1984) and
neo-institutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). The RBV posits
that sustained competitive advantage can be generated from firm resources, defined as “assets,
capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled
by a firm” (Barney, 1991, p. 101) that are valuable, rare, inimitable, and non-substitutable.
This is true provided that these resources are identified and deployed effectively. Appositely,
neo-institutional theory offers a useful counterbalance to the RBV in our theorizing on
outward staffing flows, as it allows consideration of the social context within which resource
selection decisions are embedded (see also Oliver, 1997).
A key premise of the RBV is that resource endowments are not easily transferable;
hence, sustained competitive advantage is derived from the firm possessing and using various
resource combinations (Barney, 1991). Given that managerial resources are potentially one of
the more important strategic resources of the firm (Holcomb, Holmes, & Connelly, 2009; Tan
& Mahoney, 2003), flows of managerial talent from subsidiaries may represent a key source
of sustainable competitive advantage in the MNE. Indeed, the RBV focuses directly on the
potential value of the firm’s internal asset stocks for conceiving and executing corporate
strategies (Morris, Snell, & Wright, 2006). Stahl et al. (2007) further argued that international
assignment experience is valuable and hard to imitate and can create competitive advantage in
itself. Looking specifically at subsidiary managerial talent, Tan and Mahoney (2003, p. 183)
identify three key contributions that they can make to the MNE. First, they can implement the
9
MNE’s strategies to achieve economies of scale and coordination. Second, they can facilitate
access to valuable local resources. Third, they can help integrate resources and capabilities
from different subsidiaries into “transnational” capabilities (see also Bartlett & Ghoshal,
1989). Similarly, McWilliams, Van Fleet, and Wright (2001) identified two benefits of the
global workforce in the context of the RBV: (1) capitalizing on global labor pools by drawing
on diverse labor pools to meet the different needs of the firm, and (2) exploiting the cultural
synergies of a diverse workforce by drawing on diverse perspectives in managerial decision
making (see also Morris et al., 2006, for a discussion). The RBV, however, can be criticized
for failing to account for organizational context or the external environment (Paauwe &
Boselie, 2003)
Appositely, neo-institutional theory emphasizes the influence of the societal or
cultural environment on organizations (DiMaggio & Powell, 1983; Meyer & Rowan, 1977;
Scott, 2008). These influences represent the norms, values, and taken-for-granted assumptions
that frame decisions regarding what constitutes appropriate or acceptable behavior. Formally
defined, institutions “comprise…regulative, normative and cultural cognitive elements that,
together with associated activities and resources, provide stability and meaning to social life”
(Scott, 2008, p. 48). Hence, firm behavior is not always rational and institutional theorists
emphasize the extent to which firm behaviors are socially defined and hence compliant,
habitual, and unreflective (Oliver, 1997). This results in isomorphism, defined as a
constraining process that forces one unit in a population to resemble other units that face the
same set of environmental conditions (DiMaggio & Powell, 1983, p. 149).
DiMaggio and Powell (1983) identified three key drivers of isomorphism. First,
coercive isomorphism results from imposing patterns of behavior by a powerful constituency
(e.g., government). In situations of uncertainty, mimetic isomorphism results from
organizations replicating patterns evident in organizations perceived to be successful. Finally,
10
normative isomorphism results from professional organizations such as universities or
consultancies disseminating organizational practices within a field.
A key tenet of institutional theory is the idea that to become accepted, organizations
must be perceived as legitimate within the organizational field in which they operate. Hence
legitimacy, “…the generalised perception or assumption that the actions of an entity are
desirable, proper or appropriate within some socially constructed system of norms, values,
beliefs, and definitions” (Suchman, 1995: 574) represents a central construct in institutional
theory and something which often impacts the adoption of organizational forms or practices
(see Deephouse & Suchman, 2008). Legitimacy is seen as vital for organizational success and
survival since without it, critical resources may be withheld, withdrawn or simply unavailable
(Meyer & Rowan, 1977). In an international context scholars point to the requirement for the
MNE subsidiary to be legitimate in the host country (external legitimacy) as well in the eyes
of the HQ (internal legitimacy). This polemic has been conceptualized as the management of
‘institutional duality’ (Kostova & Roth, 2002). Thus institutional theory offers a
counterbalance to the rational perspective proposed by RBV, by recognizing the impact of
societal expectations and institutions on managerial decisions. For example, the
institutionalized nature of control mechanisms in MNEs of US origin (Ferner et al., 2004;
2007) may decrease the likelihood of outward staffing flows in US owned subsidiaries.
Similarly, the legitimacy which the subsidiary operations enjoy in the MNE network may
significantly influence on outward staffing flows, with higher levels of legitimacy developed
through factors such as length of establishment positively influencing on outward staffing
flows.
Differentiating between four key sets of influence on outward staffing flows and
drawing on the RBV and institutional theory we develop a theoretical framework (see Figure
1). The selection of the specific independent variables is informed by the RBV, neo-
11
institutional theory and the extant international assignment literature but also by pragmatic
considerations, i.e. having reliable measures and a sufficient sample size to allow useful
analysis.
Formatted: Left
TAKE IN FIGURE 1 APPROXIMATELY HERE.
Headquarters Factors
We argue that several HQ factors will influence how resources within subsidiaries are
evaluated and hence impact outward staffing flows to the HQ and other subsidiaries.
Notwithstanding trends toward global convergence of organizational forms predicted
by institutional theory, we postulate that an MNE’s country of origin will impact outward
staffing flows. As organizations within the same population become similar, or isomorphic,
they are influenced over time by similar regulative, cognitive, and normative institutional
influences (see DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 2008). For
example, a well established body of literature points to the country of origin as a significant
explanatory factor in predicting flows of PCN expatriates, with Japanese firms most likely to
use PCNs and U.S. firms least likely. European firms tend to be more heterogeneous, with
UK firms closest to their U.S. counterparts and German firms more closely resembling
Japanese MNEs (Brewster & Scullion, 1997; Harzing, 1999; Kopp, 1994; Tung, 1982). This
divergence is largely explained by the differing orientations towards controlling foreign
subsidiaries. Specifically, U.S. MNEs tend to rely to a greater degree on formalized,
centralized control through standardized policies rather than PCNs (see Ferner et al., 2004).
Conversely, Japanese firms rely more on personal control through PCN assignees (Harzing,
2001). This literature also suggests that U.S. MNEs tend to be relatively ethnocentric in
orientation (Ferner et al., 2004) and less open to ideas from subsidiaries (Edwards et al.,
2005). Consequently, our first hypothesis is as follows:
12
H1:
The use of a) inpatriates and b) TCNs will vary according to the nationality of
the MNE.
We predict that MNE size, measured by worldwide employment of the MNE, also will
impact staffing flows. In this regard DiMaggio and Powell (1983, p. 152) point to the key role
that external consultancies play in reducing diversity among larger firms. They argue that a
small set of major consultancies spread a few organizational models throughout the
organizational field. Although smaller firms may catch up with larger firms through mimetic
isomorphism, they may not have the resources to develop specific organizational practices
fully. As Tregaskis, Heraty, and Morley (2001) argued, “larger organisations, by their nature
and structure…are…more likely to have the resources to invest in sustaining an internal
labour market” (p. 45). A growing body of literature points to greater emphasis on developing
global competence and building global talent programs (Cascio & Aguinis, 2008). In this
regard, drawing on talent pools beyond the home country through, for example, the
deployment of TCNs or inpatriates emerges as a key means of globalizing the workforce
(Harvey et al., 2000, 2001).
H2:
Larger MNEs, measured by worldwide employment, will be more likely to
display flows of (1) inpatriates and (2) TCNs than smaller MNEs.
Institutional theory also predicts similarity in industries as conformity to common
norms and expectations results in the diffusion of common knowledge and understandings
(Oliver, 1997) that translate into common practices. In this regard, the key insight is that the
extent to which a firm requires an understanding of local institutions, culture and norms will
have a significant impact on resource requirements in the host operations and, in situations in
which an understanding of local contexts within the MNE is important, we might expect
higher levels of outward staffing flows. Given that service organizations require a greater
understanding of the local context owing to the requirement to be more responsive to local
13
customers, we predict greater outflows of inpatriates and TCNs in organizations in the service
sector. TCNs, although not directly from the host location, generally will have a greater
knowledge of the host culture than PCN expatriates, due to the spatial proximity of many
TCNs’ home country to the country in which they are assigned (Reynolds, 1997).
Specifically, inpatriates and TCNs may be deployed in services firms to further understanding
of the local context.
H3:
Service sector MNEs will be more likely to display flows of (1) inpatriates and
(2) TCNs compared to manufacturing firms.
Subsidiary Factors
Subsidiary characteristics also are likely to influence the nature of resources available
and to impact outward staffing flows significantly. In this regard, the method of company
establishment in the host environment (i.e., whether the MNE was established in Ireland
through a merger/acquisition or greenfield site) is likely to be a key explanatory factor. From
a resource-based perspective, Penrose (1959) discussed the prerequisite of “managerial slack”
for growth. Put simply, in the context of our theorizing, if a subsidiary does not have such
slack (excess managerial talent), then it is less likely to transfer subsidiary employees as
inpatriates or TCNs. In subsidiaries formed through acquisitions, it is more likely that there
may be excess managerial talent in the subsidiary as the newly acquired subsidiary will be
able to draw on MNE resources to exploit economies of scal…
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