June 02, 2008 Department of Business Studies Bachelor ...132313/FULLTEXT01.pdf · June 02, 2008...

June 02, 2008

Department of Business Studies Bachelor Thesis Supervisor: Francesco Ciabuschi

Knowledge transfer from expatriates A study of MNCs exploitation of expatriates knowledge

Authors: Frida Hermansson

Ulrika Kilnes

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Abstract This paper investigates how expatriates experience that their knowledge gained from

international assignments is transferred and exploited by the MNC. The results from 93

expatriates from eleven Large Cap companies suggest that knowledge is not exploited trough

formal mechanisms. Instead informal mechanisms of knowledge transfer such as networks

and own initiatives seem to be a more common way of transferring and exploiting knowledge

in the investigated MNCs. The findings indicate that the knowledge that the expatriates that

failed their mission abroad gained is not exploited to the same extent as the expatriates that

successfully completed their assignments.

Key words: Knowledge transfer, learning, expatriation, repatriation, expatriate failure.

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Table of contents

1 INTRODUCTION ................................................................................................................................................. 4 1.1 PROBLEM DISCUSSION...................................................................................................................................... 4 1.2 PURPOSE ........................................................................................................................................................... 5 1.3 DISPOSITION ..................................................................................................................................................... 5

2 REPATRIATION, KNOWLEDGE TRANSFER AND EXPATRIATE FAILURE .................................. 6 2.1 INTERNATIONAL ASSIGNMENTS....................................................................................................................... 6 2.2 THE REPATRIATION .......................................................................................................................................... 6 2.3 KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION ........................................................................... 7

2.3.1 BARRIERS TO THE TRANSFER OF EXPATRIATE KNOWLEDGE .................................................... 8 2.3.2 MANAGING KNOWLEDGE TRANSFERS ................................................................................... 11

2.4 EXPATRIATE FAILURE .................................................................................................................................... 12 2.5 CONCEPTUAL FRAMEWORK ........................................................................................................................... 14

2.5.1 FIGURE 1: FACTORS EFFECTING THE TRANSFER & EXPLOITATION OF EXPATRIATE KNOWLEDGE ....................................................................................................................................... 14

3 METHODOLOGY .............................................................................................................................................. 18 3.1 COLLECTION OF DATA.................................................................................................................................... 18 3.2 SAMPLE SELECTION........................................................................................................................................ 19

3.2.1 TABLE 1: RESPONSERATES FROM PARTICIPATING COMPANIES.............................................. 21 3.3 LIMITATIONS .................................................................................................................................................. 21

4 EMPIRICAL DATA ........................................................................................................................................... 23 4.1 THE INTERNATIONAL ASSIGNMENT ............................................................................................................... 23 4.2 THE REPATRIATION ........................................................................................................................................ 23

4.2.1 EXPECTATIONS ........................................................................................................................ 23 4.2.2 CAREER OPPORTUNITIES ......................................................................................................... 24

4.3 KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION ......................................................................... 24 4.3.1 KNOWLEDGE EXPLOITATION .................................................................................................. 26 4.3.2 KNOWLEDGE TRANSFER ......................................................................................................... 28

5 ANALYSIS ........................................................................................................................................................... 31 5.1 INTERNATIONAL ASSIGNMENTS..................................................................................................................... 31 5.2 THE REPATRIATION ........................................................................................................................................ 32

5.2.1 EXPECTATIONS ........................................................................................................................ 32 5.2.2 CARRIER OPPORTUNITIES........................................................................................................ 32

5.3 KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION ......................................................................... 34 5.3.1 TYPE OF KNOWLEDGE ............................................................................................................. 34 5.3.2 FORMAL MECHANISMS ........................................................................................................... 35 5.3.3 INFORMAL MECHANISMS........................................................................................................ 37 5.3.4 INDIVIDUAL FACTORS ............................................................................................................. 37 5.3.5 ORGANIZATIONAL CULTURE AND STRUCTURE ....................................................................... 39 5.3.6 COUNTRY SPECIFIC FACTORS .................................................................................................. 39

6 CONCLUSIONS AND IMPLICATIONS ....................................................................................................... 41 6.1 MANAGERIAL IMPLICATIONS......................................................................................................................... 42 6.2 IMPLICATIONS FOR FURTHER RESEARCH ....................................................................................................... 43

7 REFERENCES .................................................................................................................................................... 44 APPENDIX 1: CONTACTED COMPANIES ....................................................................................................... 46 APPENDIX 2: QUESTIONNAIRE ......................................................................................................................... 48 APPENDIX 3: LETTER TO HR MANAGERS.................................................................................................... 51 APPENDIX 4: LETTER TO EXPATRIATES...................................................................................................... 52

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1 Introduction Globalization has had many effects on the world of business. One of these effects is an

increase in managers and other employees that are relocated on assignments abroad (Bolino

2007). An employee that is relocated abroad together with family is called an expatriate

(Collings, Scullion & Morley 2007).

An important issue of expatriate management is the repatriation of expatriates. This is a major

but often neglected issue in multinational corporations (MNCs) as well as in expatriate

research (Bonache & Brewster 2001 and Kamoche 1997). Most research concerning

expatriates has focused on the adjustment upon repatriation but little attention has been given

to issues such as how international assignments influence individual careers after completed

assignments abroad and perhaps even more importantly; whether firms take advantage of

repatriates international skills and knowledge (Lazarova & Cerdin 2007). In other words, the

individual and organizational outcomes of repatriation have not been clearly investigated. The

exploitation of skills and knowledge of returning expatriates would seem like an obvious top

priority for an MNC since an organization can acquire a competitive advantage by attaining

this knowledge. Expatriates are a key resource to new organizational knowledge since they are

able to gain knowledge about new markets, cultures and ways of doing business and

expatriates are also able to transfer knowledge based on experience to other parts of the MNC

(Lazarova & Cerdin 2007) There is in other words a value in retaining repatriates since they

are able to transfer local knowledge to the organizational headquarters upon their return

(Bonache & Brewster 2001, Welch 2003 and Hocking 2004).

1.1 Problem discussion

That repatriation often is an ignored issue in MNCs has consequences for expatriates as well

as for the MNC as a whole. One of these consequences is high turnover rate and another is

that expatriates feel that their company does not value the knowledge that they gained from

their international assignment when they return home (Lazarova & Cerdin 2007). Studies on

expatriation illustrates that expatriates have the ability to add value to MNCs by contributing

with new international knowledge (Downs & Thomas 1999). Whether or not MNCs actually

exploit this knowledge is something that have not yet been clearly investigated. We therefore

want to investigate the following research question: How do expatriates experience that their

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knowledge gained from international assignments is transferred and exploited by the MNC?

However, international assignments do not always end well. Expatriate failure1 is a

widespread problem among MNCs. We will therefore also investigate if there is a difference in

this knowledge exploitation of those expatriates that successfully completed their

international assignment and those expatriates that failed to complete their assignment. This is

interesting to investigate since it can indicate if MNCs tend to focus and learn from their

successes and not from their failures.

1.2 Purpose

The purpose of our study is to investigate how expatriates experience that their knowledge

gained from international assignments is transferred and exploited by the MNC. We will then

from our collected data analyse if there is a difference in this knowledge exploitation between

those that successfully completed their international assignment and those who failed.

Since not much research is done on the subject, this research could contribute to a deeper

understanding of the outcomes of repatriation. The focus on knowledge is important since

knowledge has been viewed as the most important element transferred in an MNC (Tsang

1999 and Bonache & Brewster 2001). Pressure from competition in the international market

makes it more important than ever for firms to gain as much knowledge as they possibly can

on how to manage the firm internationally to be able to stay competitive (Berthoin 2001).

1.3 Disposition

The following section will give a brief overview on the literature written in the area of

repatriation, knowledge transfers and expatriate failure. Section three will highlight the

arguments for our choices and the limitations of our study. In section four our results will be

presented and in section five we will analyze these results by using the presented theory. The

thesis then ends with our conclusions, the managerial implications of our study and

suggestions for further research.

1 Defined in this paper as an expatriate that had to be recalled to their home country or dismissed because of his/her inability to function effectively in a foreign country.

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2 Repatriation, knowledge transfer and expatriate failure There is not much research done in the field of knowledge exploitation and knowledge

transfer from expatriates. We have therefore in this literature review focused on the relatively

few articles that have highlighted these issues. There is however research done on

expatriates and repatriation as well as research done on knowledge transfer and learning. To

be able to analyze our results we have also chosen articles from these two different research

areas and with this material written our theory section. In order to investigate if there is a

difference in knowledge exploitation between successful and the unsuccessful expatriates we

will also discuss expatriate failure. This section then sums up with the presentation of a

conceptual framework that will guide us through our empirical data collection.

2.1 International assignments

Globalization has had many effects on international business. One of these effects is

according to Bonache and Brewster an increase in managers and other employees that are sent

on assignments abroad, so called expatriates (2001). Previous research in this area indicates

that international assignments are the single most important feature in the development as a

manager. Earlier research has also shown that CEOs with experience from international

assignments are likely to be more effective in managing MNCs (Bolino 2007). International

assignments do not always have positive outcomes. Negative implications are not unusual. A

study by Tung highlights the importance of family and the familys situation to successful

international performance. She finds that there is a need to include an assessment of the

candidate's spouse to determine if the candidate is suitability for overseas work. The

expatriates' spouses also need to be involved in training programs to prepare them for living

in a different cultural environment (Tung 1982).

2.2 The repatriation

A problem connected to international assignments is the repatriation of expatriates. The

repatriation is the process of the expatriates return and adjustment to their home countries

(Kamoche 1997, Lazarova & Cerdin 2007). This is an important but often neglected issue in

MNCs today. In order to make use of the benefits of expatriates MNCs must ensure that the

expatriates stay within the company when they return home. However, many expatriates leave

their company when they return home. This is one of the major human recourse problems

MNCs face today (Lazarova & Cerdin 2007).

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The repatriation process of the expatriate is not without problems (Mezias & Scandura 2005).

Bolino (2007) finds that former expatriates often are extremely frustrated and disappointed

when they come home because many find that their employers do not value their international

experience. Common repatriation problems that the expatriates experience are loss of status,

loss of autonomy and loss of career direction. Once again research shows that expatriates feel

that their international experience is not of much value to the company (Selmer, Ebrahimi, &

Mingtao 2002). Many perceive their jobs at home as lacking in significance compared to their

global assignments. Many expatriates also feel that they have been offered a limited amount

of career opportunities and that they are rarely considered for promotion. Repatriates feel that

they have been removed from the mainstream of corporate advancement (Lazarova & Cerdin

2007). Increased support for the expatriate while on the assignment, with for example

information about workplace changes, can prevent expatriates from feeling out of sight out

of mind, and this will ensure that the expatriate is better prepared upon repatriation (Selmer,

Ebrahimi & Mingao 2002). Mezias and Scandura (2005) have also suggested that

international mentoring and informal networks are important since this might improve

expatriate adjustment and knowledge assimilation as well as knowledge transfer and

repatriation success.

Repatriate turnover is likely to be high in organizations that are unable to meet the

expectations of the expatriates who have returned home (Bolino 2002). The basic way to

facilitate the adjustment to the home country and to make sure that the repatriation process is

made as easy as possible for the employee is to make sure that the employee has got realistic

and accurate expectations. Clear information as well as the frequency and quality of

information between the home country and the expatriate will facilitate this formation of

accurate expectations and will help the employee to better know what to expect when they

come back home (Lazarova & Cerdin 2007).

2.3 Knowledge transfer and knowledge exploitation

The previous section illustrated that one of the problems with the repatriation process is that

many expatriates feel that their company does not value the knowledge that they gained

abroad. In spite of this, or maybe just because of this, recent studies on expatriate

management have turned the attention to expatriates as vehicles of knowledge transfer. These

studies shows that expatriates can function as a key resource to new knowledge since they are

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able to gain knowledge about new markets, cultures and ways of doing business (Collings,

Scullion & Morley 2007 and Lazarova & Cerdin 2007).

When it comes to the transferability of knowledge two different types of knowledge is often

highlighted in the literature, tacit and explicit knowledge. Tacit knowledge refers to the

knowledge that is hard to codify and teach. This type of knowledge is achieved trough

experience and observations and not trough formal learning. Explicit knowledge on the other

hand refers to knowledge that more easily can be shared and formally transmitted trough for

example blueprints and manuals. Both of these types of knowledge are important when it

comes to the transfer of expatriate knowledge (Riusala & Suutari 2004 and Nonaka 1991).

2.3.1 Barriers to the transfer of expatriate knowledge

Transfer of expatriate knowledge within the MNC is not an easy task and a study done by

Riusala and Suutari (2004) supports this fact. According to Riusala and Suutari there are at

least four sets of factors, also referred to as stickiness factors that influence the difficulty of

international knowledge transfer.

The first factor concerns the type of knowledge that is transferred, and more specifically if the

knowledge is tacit or explicit in its nature. Riusala and Suutari found in their study, done on

24 Finnish expatriates in Poland, that many expatriates perceived that the knowledge they

transferred included tacit elements. As a result, their knowledge could not be transferred

exclusively through written material. Oral communication and experience was also of

importance. Tsang (1999) have also acknowledged the importance of turning tacit knowledge

into explicit knowledge. In order to make the expatriate knowledge useful for the

organization, the tacit knowledge that is placed in the mind of the individual must be

transformed to explicit knowledge that can be shared in the whole MNC.

The second factor that, according to Riusala and Suutari, influences the difficulty of

knowledge transfer is the social context. This refers to features connected to a specific

country. Studies indicates that the success of knowledge transfers is partly dependent on

country specific features and Riusala and Suutaris study point out that the bureaucracy of the

public authorities, legislation, taxation as well as the traditional use of bribes and gifts all

affect the transfer of expatriate knowledge.

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The third factor that Riusala and Suutari highlight is the organizational context. This factor

concerns the effect the organizational culture has on the transfer of knowledge. According to

the Finnish expatriates in the study the general organizational culture did however not hinder

the transfer of expatriate knowledge, instead the interviewed expatriates highlighted that the

organizational culture supported innovation and change.

The fourth and final factor influencing the transfer of expatriate knowledge is, according to

Riusala and Suutari, the relationship context. This factor concerns attitudinal (commitment to,

identification with and trust in the parent company) as well as power/dependence

relationships. When it comes to attitudinal relationships the authors study showed that the

locals were committed to and felt trust within the parent company but that the majority of the

expatriates saw that locals primarily identified themselves with the local company instead of

the parent company. Concerning the power/dependence relationships the majority of the

Finnish expatriates perceived that the subsidiaries were dependent on the parent and as a

result they thought that the motivation and need for transferring knowledge would also would

increase (Riusala & Suutari 2004).

Similar to Riusala and Suutari, Berthoin (2001) has also highlighted the difficulties connected

to knowledge transfers. However, Berthoins research focuses on the exploitation of

expatriate knowledge when the expatriates have returned home. Berthoins study, done on

two German companies, illustrates the difficulty in turning expatriates tacit knowledge into

explicit knowledge. Berthoin acknowledge that a gap exists between what individuals learn

and what the organization as a whole learns from international assignments. According to

Berthoin (2001) there are three main barriers when it comes to turning expatriates knowledge

into organizational knowledge.

The first barrier is connected to the process of organizational learning. Berthoins study

indicates that difficulties when it comes to the distribution of knowledge are related to the

absence of interest, initiatives and structures for the communication of knowledge. As a

result the expatriates in the German companies had to develop their own way of distributing

their newly gained knowledge. What is interesting to note is that several of the German

expatriates highlighted that is was more effective to wait until their knowledge was asked for

than it was to prove their knowledge when they wanted to communicate. Another problem

that Berthoin found was that it was hard for the expatriates to get their co-workers at home to

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understand their new knowledge. The interviewed expatriates felt that the absence of a shared

understanding lead to difficulties in knowledge sharing. This problem has to do with the fact

that organizational learning only is possible if the employees can achieve a shared

understanding of the knowledge. However, when the local employees were able try the new

knowledge in their own context they were also able convert the knowledge into their own

tacit knowledge. As a result the new knowledge could be embedded in new organizational

structures (Berthoin 2001).

The second type of barrier Berthoin acknowledges is the cultural and structural barrier.

Berthoins study (2001) indicates that the factors needed to motivate and support learning

processes were often missing in the organizational/national culture or held back by the firms

structure. A specific cultural feature that was highlighted as a barrier to knowledge transfer by

the interviewed expatriates was the organizational politics within headquarters. The

expatriates highlighted that the fear of loosing power was one of the reasons to why

headquarters did not use the expatriates knowledge. Another reason was fear for sharing new

ideas with other co-workers. The returning expatriates also mentioned that the structure of the

company functioned as a barrier to organizational learning since the hierarchical structures

within the firm made knowledge sharing difficult. In large MNCs with bureaucratic structures

it becomes more difficult to identify the relevance of and develop a mutual understanding of

the new knowledge (Berthoin 2001).

The third barrier Berthoin (2001) highlights concern the way the expatriation process is

managed. Studies done in the area of expatriation recommends that the process of expatriation

is handled as a whole cycle. However, in reality the expatriation process is not always treated

accordingly. As a result, the MNCs overall strategy, the HR policies and the expatriation

process often stands in contrast to the organizational learning. Many expatriates in Berthoins

study reported that bad connections with managers during their time abroad negatively

affected their ability to contribute to the organizational learning when returning. Furthermore,

Berthoins study also indicated that the position that the company assign for the returning

expatriate also affect the use of knowledge within the organization. If an expatriate is

assigned to a position connected to the region that she/he have been working with in the

MNC, the company is more likely gain more from the expatriates than they would if the

expatriate was assigned another position. However, regardless of the position gained after

returning home, active procedures with the purpose of identifying and sharing knowledge are

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according to Berthoin crucial to facilitate the learning process within a MNC. Tacit

knowledge is not easy to express and it is therefore of great importance for a MNC to

acknowledge the importance of interaction and communication. As a result the expatriates

tacit knowledge can be turned into explicit knowledge (Berthoin 2001). In the same vein as

Berthoin, Nonaka (1991) argues that turning tacit knowledge into explicit knowledge can be

done by creating what he calls a knowledge creating company. This type of company is built

on internal competition, free information and strategic rotation. In this type of organization

there is a conscious overlapping of activities, information and managerial responsibilities

(Nonaka 1991). Hence, according to Nonaka (1991), a knowledge creating company needs to

have a specific kind of organizational culture that encourages the above mentioned values.

2.3.2 Managing knowledge transfers

To transfer expatriates knowledge to different parts of the MNC is, as the previous sections

have shown, not an easy task. To manage these flows of knowledge is therefore of high

importance if a company wants to gain something from the expatriates international expertise.

A study done by Kamoche (1997) focuses on a number of implications concerning

expatriates knowledge transfer. Kamoche argues that if a company wants to benefit from

expatriates knowledge the organization needs to evaluate expatriates experiences, create

information channels (such as manuals, news letters and databases) as well as linking the

international mission with career management. However, Kamoche also argue that failure of

taking advantage of expatriates knowledge occur because of inconsistencies at the strategic

level. By not having a consistent strategic vision about the significance of the expatriates

knowledge, the organization will neglect valuable support mechanisms to take care of the

knowledge. Kamoche therefore suggest a model of effective learning that highlight strategic

thrust as well as operational and social mechanisms on both the individual and the

organizational level (Kamoche 1997).

Downs and Thomas (1999) have also studied how an organization can benefit from

expatriates knowledge. These two authors highlight that expatriates are a source of

sustainable competitive advantages since they are able to transfer tacit knowledge from

different international missions. However, in order to benefit and control this knowledge

MNCs must build up an infrastructure with the purpose of supporting the adaptation and

institutionalization of expatriates knowledge. Downs and Thomas (1999) therefore suggest

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that a MNC needs to address the individual and organizational goals as well as develop

flexible expatriate policies and incorporate the expatriate into long-term career planning as

well as to reward international assignments.

2.4 Expatriate failure

In addition to the problems connected to repatriation and knowledge transfers, expatriate

failure is also a problematic issue of international assignments and expatriate management.

Earlier research has for example demonstrated that a majority of expatriate managers fail their

job assignments in developing countries (Maurer & Li 2006).

The most cited and commonly used definition of expatriate failure is the definition by Tung.

In Tungs research respondents were asked to indicate the percentage of expatriates that had

to be recalled to their home country or dismissed because of their inability to function

effectively in a foreign country (Tung 1981). In later research Tung defines failure as the

inability of employees to perform effectively in a foreign country and hence, the need for the

employee to be fired or recalled home (Tung 1987). There is however a lot of critique

directed towards this definition. The definition is to simplistic in that sense that the definition

implies that as long as the expatriate stays abroad for the contracted time, the assignment is to

be looked upon as a success. (Lee 2007). Factors like cross-cultural adjustment and actual

performance abroad could and maybe should also be incorporated in the definition of success

and failure (Collings, Scullion & Morley 2007). In an interview study by Lee, respondents did

not agree with the traditional definition of expatriate failure. Respondents found issues such

as the inability to learn new things and inability to adapt as more appropriate measures of

failure. Other issues that the respondents also though were important when defining failure

was the inability to achieve performance standards, repatriation difficulties and the companys

undervaluing of repatriates skills and knowledge (Lee 2007). Tung writes in a later published

article that cross-cultural adjustment and actual performance are factors that also should be

looked upon when deciding whether an expatriate assignment is a failure or a success (Tung

1998).

A broader definition of failure combines the traditional definition, premature return from

overseas assignments, together with a definition of failure as individuals who return from

overseas assignments but then leave the firm within one year of repatriation (Black,

Gregersen 1991). According to Harzing (1995), premature reentry might be a very inaccurate

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way of measuring expatriate failure. Harzing (1995) means that one can easily argue that

those expatriates who stay on their assignment but who fail to perform inadequately are

(potentially) more damaging to the company than the ones who return prematurely.

In many cases, what might be bad for the organization and looked upon as a failure might be a

success for the individual. Expatriate turnover is very expensive for the organization and is

therefore almost always looked upon as a failure. International experience will potentially

give the employee an edge that will make them more marketable and therefore also more

likely to leave. It makes no sense for the employee to stay faithful to the company if the

employee is presented with better opportunities in other companies (Lazarova & Cerdin

2007). This means that the failure in the sense that the employee quits might be good for the

employee since the employee leaves because better opportunities are presented elsewhere. We

will, however, define failure from the organizations point of view.

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2.5 Conceptual framework

The literature review has highlighted several factors that seem to have an effect on the transfer

and exploitation of expatriate knowledge. These factors are summarized in figure 3.

2.5.1 Figure 1: factors effecting the transfer & exploitation of expatriate knowledge

2.5.1.1 The international assignment

Family and the familys situation is a very important factor when it comes to the success of

international performances (Tung 1982). As a result this could also, in the long run, have an

effect on the transfer of expatriates knowledge.

2.5.1.2 The repatriation

Expectations are of great importance in MNCs since repatriate turnover is likely to be high in

organizations that are unable to meet the expectations of the expatriates who have returned

home (Bolino 2002). The basic way to facilitate the adjustment to the home country is to

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make sure that the employee has got realistic and accurate expectations home (Lazarova &

Cerdin 2007). It is easier to transfer knowledge

Berthoin says that the entire expatriation process has to be successful if the firm wants a

successful knowledge transfer (2001). It is therefore likely that expatriates where expectations

are met transfer knowledge in a successful way.

Career opportunities concern the expatriates job options upon return. For example, Lazarova

& Cerdin (2007) as well as Berthoin (2001) have highlighted that a MNC will gain more

knowledge if the expatriate is a given a position connected to the region he/she has specific

knowledge about.

2.5.1.3 Knowledge transfer and exploitation

Type of knowledge refers to the different types of knowledge an expatriate can gain. Studies

done by Collings, Scullion & Morley (2007) as well as Lazarova & Cerdin (2007) showed

that expatriates can function as a key resource to new knowledge since they are able to gain

knowledge about technology, the unit itself as well as the market (including culture and ways

of doing business). This knowledge can also be tacit or explicit in nature. Among others,

Berthoin (2001), Riusala & Suutari (2004), Nonaka (1991) and Tsang (1999) acknowledged

the importance of turning knowledge that can benefit the whole organization from tacit into

explicit knowledge

Formal mechanisms of knowledge exploitation concern instruments such as databases,

manuals, newsletters, seminars and workshops but also if an organization has a specific

strategy or vision about knowledge exploitation or not. Downs and Thomas (1999) and

Kamoche (1997) have for example argued that MNCs must build up a supporting

infrastructure in order to gain something from the expatriates knowledge. For knowledge

transfer to be successful Berthoin (2001) have highlighted that these types of mechanisms

must exist throughout the whole expatriation period, not only when the expatriate returns

home.

Informal mechanisms of knowledge exploitation have to do with relationships between co-

worker as well as other informal networks. Riusala & Suutari (2004) and Berthoin (2001) all

pointed out the importance of creating channels of communication within the MNC. In the

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same vein have Mezias and Scandura (2005) also proposed that informal mechanisms such as

international mentoring can improve knowledge transfers within the MNC.

Individual factors refer to factors connected to the communication and interpretation of the

knowledge. For example, Berthoins study indicated that it is hard for expatriates to get their

co-workers at home to understand their new knowledge due to difficulties in interpretation

and communication. This factor also includes expatriates own perception and interpretation

of their knowledge.

Organizational culture concern traditions, power relations and attitudes connected to the

organization. Riusala & Suutari (2004), Nonaka (1991), Kamoche (1997) and Berthoin (2001)

all highlight the effect that the organizational culture can have on the transfer of knowledge. If

the organizational culture is open for both communication and change it seems like it the

exploitation of expatriate knowledge is easier then in firms with a closed and bureaucratic

organizational culture. Organizational structure refers to vertical and horizontal structures

within the company. For example, the returning expatriates in Berthoins study expressed that

the structure of the company functioned as an obstacle to organizational learning since the

firms hierarchical structure made knowledge sharing difficult.

Country specific factors refer to features connected to one specific country. Riusala and

Suutaris (2004) study pointed out that the bureaucracy of the public authorities, legislation

and taxation as well as the traditional use of bribes and gifts all affects the transfer of

expatriate knowledge.

2.5.1.4 Expatriate failure

As earlier mentioned the possible difference in the knowledge exploitation of those expatriates

that successfully completed their international assignment and those that failed is also going

to be investigated. In our empirical study, we will use the definition of Tung. Even though

there is a lot of critique directed towards this definition, it still is the most quoted definition.

The definition of failure will therefore be that the expatriate failed if the individual had to be

recalled to their home country or dismissed because of their inability to function effectively in

a foreign country. Since we only will be able to access the ones that stayed within the

company, we will look at those who had to be recalled early. We will also add those who

requested and received a transfer back home prematurely (Naumann 1992) as expatriate

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failures. Expatriate success will be defined as an assignment abroad were the expatriate

completed the assignment according to contract or when the expatriate was recalled early

because the assignment was completed ahead of schedule.

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3 Methodology In this section we will present the design of our study and how we have collected our data. We

will also argue for the choices that we have made and the consequences of these. The

limitations of our study will also be presented.

3.1 Collection of data

Since many studies have indicated that expatriates often are frustrated about the knowledge

exploitation within their company we choose to investigate knowledge transfer and

exploitation from the expatriates point of view. An alternative would be to investigate the

same issue but from a companys point of view, by collecting data from, for example, HR-

managers in each company. We chose the expatriates point of view not only because of the

indications from earlier studies but also because this viewpoint enabled us to reach the

individuals that actually had real life experience of missions abroad. HR-managers would be

able to give us a good picture of how expatriation and repatriation policys functioned in

theory but by collecting data from the expatriates we were able to get an idea of how these

policies worked in reality. By choosing the expatriates viewpoint we were also able to get a

more detailed picture of the factors that affected knowledge transfer and exploitation, while a

company perspective potentially would have given us a better overview. A focus on the

expatriates themselves also enabled us to get several different statements from people within

the same company. This would not have been possible to the same extent if we had chosen a

company perspective.

The choice of investigating from the expatriates point of view left us with two main options

for data collection, interviews or questionnaires. We chose the latter since we wanted to get

information from a large sample of expatriates. As a result we were also able to draw more

general conclusions based on the results from our study.

We decided to design a questionnaire on the website SurveyMonkey.com. We were

recommended to use this website since this site makes it is very easy to collect and analyse

the results from the respondents. The questionnaire (appendix 2) was divided into four

different parts. Part one (general information) was designed to get a general picture of the

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expatriates. This part included general questions about for example age, sex and position. Part

two (the international assignment) included more specific questions about the international

assignment such as how many years the expatriate had been assigned for and if there were any

financial bonuses attached to the mission. Part three (the repatriation) focused on the

repatriation process and included questions about the return, the expatriates expectations and

career opportunities. This part was also designed in a way that enabled us to make a

distinction between successful and unsuccessful assignments. The final part (knowledge

transfer and exploitation) was designed to in investigate knowledge transfer and knowledge

exploitation in more depth. This part included general questions about knowledge but the

respondents were also asked to rank different statements about knowledge transfer and

knowledge exploitation. When the respondents were asked to rank a statement a scale from

one to seven was used. We choose this scale since it is the most commonly used scale when

designing surveys.

After some preliminary testing of the questionnaire two questions in the survey were slightly

changed in order to avert misunderstanding. These adjustments did, however, not change the

contents of the questions.

3.2 Sample selection

Since our study concerns knowledge exploitation of expatriates, we choose to focus our

selection of companies to large international firms. The sample selection of companies was

based on the OMX Stockholm 30 Index from 2008-01-02. The OMX Stockholm 30

(OMXS30) consists of the 30 most traded stocks on the Swedish Stock Exchange (Den

Nordiska Brsen 2008). We chose OMX Stockholm 30 because we wanted to investigate how

companies traded in SEK deal with knowledge exploitation of expatriates. The companies

quoted on the exchange also have a high degree of transparency when it comes to accounting

as well as the willingness to answer questions from people outside of the company, since

those people might be future investors.

Companies traded on the Swedish Stock Exchange are divided into three segments, Large

Cap, Mid Cap and Small Cap. Large Cap companies have a market cap or market value

exceeding 1 billion euro (Den Nordiska Brsen 2008). All of the companies on OMX

Stockholm 30 are Large Cap companies. We believe that the companies listed on OMXS30

are representative for MNCs in the Nordic countries and are more likely than smaller

20

companies (companies with market values below 1 billon euro) to have the possibility to send

expatriates to subsidiaries. There is however a possibility that these big companies differ in

their handling of expatriate repatriation from how smaller companies handle expatriate

repatriation. .

Companies on the Stockholm Stock Exchange are also divided into ten different industries

according to the international standard GICS (Global Industry Classification Standard)

developed by Standard & Poors and Morgan Stanley (Den nordiska brsen 2008) . However,

we did not select a specific industry that we wanted to contact for our sample; instead we

contacted all the companies on the OMX Stockholm 30, which meant that we contacted 29

companies (see appendix 1)2.

We started out with our sample of 29 companies that are the companies behind the 30 most

traded stocks on the OMX stock exchange in Stockholm. To collect data from this sample we

sent out e-mails to the HR managers, IR manages or communication managers in these

companies. The purpose of this mail was to get hold of names and e-mail addresses of

expatriates that had returned home from their assignment abroad but were still working within

the company. Ericsson offered to send the survey to 10 expatriates. Scania sent it to 18

employees. Only 13 of the companies that we contacted answered, two agreed to participate.

Since we only received 15 survey answers by expatriates, we started calling all the companies

that didnt respond to our first e-mail or our reminder e-mail (the reminder mail was sent out

ten days after the first e-mail). The result was that Teliasonera, Sandvik, Electrolux, SSAB,

Volvo also agreed to participate in our survey. Teliasonera sent the letter to six expatriates

and Sandvik to nine. From Volvo, SSAB and Electrolux we unfortunately only got one

respondent from each firm. Since we still did not have enough respondents for our study, a

friend was contacted on Ericsson. This friend offered to help us and as a result 97 expatriates

from Ericsson were contacted.

Since we were running out of time to get the answers that we needed, we decided to contact

all the other large cap companies on the OMX Nordic exchange (see appendix 1). Five of

these companies only had operations in one country and as a result we sent out e-mail to 91

additional companies. The outcome of this was that four companies agreed to participate in

2 Ericsson has two different stocks, A and B, and that is why it is only 29 companies in the Stockholm 30.

21

our study. Kesko Food LTD sent the letter to four expatriates, Konecranes Oyj to six, Danske

Bank to 21 and Swedbank Group to four expatriates.

3.2.1 Table 1: Responserates from participating companies

3.3 Limitations

Only a few of the 120 companies that we contacted agreed to participate in our study. There is

a risk that only the ones that agreed to participate were the ones that focus on and prioritize

their expatriates. This might lead to answers from expatriates that are more positive than the

average expatriate would give. This might in turn have affected the results that we have

found.

We chose to contact all Large Cap companies on the Nordic OMX exchange and as a result

we did not select a specific industry that we wanted to contact for our sample. A limitation of

our sample selection could therefore be that we are not looking for potential industry-related

differences.

Of the expatriates that agreed to participate in our study, 50,55% were employed by Ericsson.

That expatriates from Ericsson represented such a large amount of the total respondents could

be seen as a limitation. However, our study did not have a company focus. The aim with the

study was to analyze knowledge transfers and knowledge exploitation from the expatriates

point of view regardless of employing company. We chose the employees point of view. This

choice represents a limitation since we are not able to tell something about the repatriation

22

policies that actually exist, or does not exist, within the participating companies. We are only

able to analyse how the expatriates experience the knowledge transfers and exploitation.

We chose to only contact those expatriates that are still employed within the company, not the

expatriates that failed with their assignment and left the company afterwards. We might have

reached different results if we surveyed the ex-employees. The might have been less content

with the way they were treated when they came back than the ones that stayed within the

company.

We have in this study highlighted factors that can effect knowledge exploitation within

MNCs. Many different external factors could affect how an expatriate believes that his/her

knowledge is exploited by the MNC. Age, sex, amount of years within the company, the

amount of missions abroad, the expatriates position within the company, location of the

assignment, financial bonuses and the success/failure of the mission are all examples of

factors that potentially could influence the exploitation of knowledge within a MNC. You

could for example assume that an expatriate that have completed many missions abroad

would be more likely to transfer knowledge than an expatriate that is doing his/her first

assignment (the opposite is of course also possible). Due to the scope of this study we only

considered one of these factors, namely if there is any difference in the knowledge

exploitation between expatriates that successfully completed their assignment and those who

failed.

A certain definition of expatriation failure has been chosen in this study and this will

influence the selection of people that we believe fit into our group of unsuccessful expatriates.

Implications for further research would be to apply either a broader or narrower definition of

expatriate failure to see if the results that we reach in our investigation still hold. We will look

at the expatriates who had to be recalled to their home country or dismissed because of their

inability to function effectively in a foreign country and the ones who requested and received

a transfer back home prematurely. As stated before, we will not look upon early reentry as a

failure if the expatriate was recalled early because the assignment was completed ahead of

schedule. Another limitation could be that there might be a bias towards the successful or the

unsuccessful answers in our survey. For example, expatriates that succeeded with their

expatriate assignment might be more willing to talk about their time abroad than the ones that

failed are.

23

4 Empirical data In this section the findings from our questionnaire are presented. These results are based on

answers from 93 expatriates in 11 different companies.

4.1 The international assignment

85,6% of the respondents were male. Most of the expatriates in our study were between 31

and 40 years old. 70,33% of the respondents were Swedish, 13% were Danish, 6,6% were

Finnish and the remaining were Dutch, Lithuanian, Estonian, Cameroonian, Italian, French

and American. The majority of the respondents were directors or managers. The majority of

the respondents, 71,1%, were located in a Swedish unit or corporate headquarters. Everyone

that completed the questionnaire has returned home. The majority of the respondents, 52,3%,

returned in 2007. The expatriates have all been located in very different parts of the world. To

mention some they have been located in countries like China, United Arab Emirates, Brazil,

Algeria, Saudi Arabia, Egypt, France, India, Italy, Japan, the UK and the US. The majority

(44,3%) has only done one international assignment in their career, but some have done more

than seven. 55,7% were abroad for two to three years. 75,9% of the expatriated had their

family with them abroad. 34,8% of these families had problems to accommodate to local

conditions. When comparing the successful expatriates with the unsuccessful, 29,2% of the

successful expatriates said that their families had problems to accommodate to local

conditions. The number for the failed expatriates was almost twice that at 53,3%.

Of the 63 expatriates that participated in our study 28,7% returned home earlier than planned

from their assignment. 52% of these expatriates requested and received a transfer back

prematurely due to personal reasons and 32% were requested by their company to return

early. The remaining 16% requested and received a transfer back prematurely due to work

related reasons or completed the assignment earlier than the contracted time.


4.2.1 Expectations The expatriated were asked to evaluate: Did your repatriation process meet your

expectations? The following answers were collected:

24

When only including the expatriates that failed their mission abroad the following answers was collected:

4.2.2 Career opportunities When asked about what position the expatriates returned to after their last assignment abroad,

51,7% answered that they returned to a position with higher status and 36,8% answered that

they returned to the same or a similar position. The remaining 11,5% returned to a position

with lower status than the one they had when they left for their international assignment.

The expatriates were asked to evaluate the statement: After your time abroad, your

opportunity to career advancement has: The following answers were collected:

When only including the expatriates that failed their mission abroad the following answers

was collected:


64,4% of the respondents expressed that they transferred knowledge to co-workers when they

came back from their international assignment. 96,5% expressed that there were no formal

mechanisms of knowledge transfer related to the return of expatriates in the company that

they are employed in. When asked to describe the mechanisms applied in their company to

transfer the competence accumulated during their mission abroad, the respondents gave

examples such as holding seminars and meetings with HR. One also answered that: It was

25

more the type of job I was offered than any specific mechanism. Another said that it was part

of the new job position.

When asked about what type of knowledge expatriates felt that they mostly have gained from

their assignment abroad, 67% answered that they mostly gained specific knowledge about the

market. 29,5% answered that they mostly gained specific knowledge about the unit they were

working in and 3,4% answered that they mostly gained specific knowledge about technology

and products.

54,5% of the expatriates that failed their assignment abroad said that they transferred

knowledge to co-workers when they came back from their international assignment. All these

expatriates expressed that there were no formal mechanisms of knowledge transfer related to

the return of expatriates in their company. 59,1% of the failed expatriates answered that the

knowledge they gained abroad was knowledge about the market, 36,4% answered that they

received knowledge about the unit and 4,5% answered that they had gained knowledge about

technology.

26

4.3.1 Knowledge exploitation The respondents were asked to evaluate the following eight statements about knowledge

exploitation on a scale from one to seven where one represented not at all and seven very

much. The following answers were collected:

Most of the respondents did not agree with the statement that the company evaluated their

experience when they returned home. On the same scale respondents were asked to evaluate if

they had been given the opportunity to hold seminars and/or workshops concerning their

assignment abroad. Most disagreed. When asked to evaluate the statement I have been

assigned to a position within the company that takes advantage of my specific international

knowledge, most agreed. Most disagreed to the statement that they have been encouraged

and inspired by their company to communicate their international knowledge their everyday

work. The expatriates believed that their co-workers had been able to take advantage of and

use the knowledge that the expatriate gained abroad in their own context. 77,8% of the

respondents did not write a formal report on their mission abroad. Most expatriates were

aware of the outcome of their mission abroad and did not believe that their colleagues were

aware of the outcome of their mission abroad.

27

When only including the expatriates that failed their mission abroad the following answers

were collected:

Most failed expatriates, 30%, did not agree to the statement the company evaluated my

experience abroad when I returned home. 73,7% of the failed expatriates had not at all

been given the opportunity to hold seminar or workshops. 84,2% of the failed expatriates also

answered not at all when asked if they had been writing a formal report about their mission.

Most expatriates did not feel that they had been encouraged by their company to share their

knowledge and majority of the expatriates did not feel that their co-workers had been able to

use their knowledge in their own context. 40% of the failed expatriates answered very much

to the statement I am aware of the outcome of my mission abroad. This statement also had

the highest average rating of all the statements, 5,00.

28

4.3.2 Knowledge transfer

The respondents were also asked to evaluate seven different statements about knowledge

transfers on a scale from one to seven where one is strongly disagree and seven is strongly

agrees. The following answers were collected:

Most of the respondents did not experience knowledge transfer as difficult because their co-

workers interpreted the knowledge differently than they had. When asked to evaluate if

knowledge transfer was difficult because the organizational culture created barriers for

knowledge transfer, most disagreed. When asked to evaluate the statement transfer of

knowledge was difficult because the organizational structure of the company created barriers

for knowledge transfer, most disagreed. The majority of the respondents did not believe that

the transfer of knowledge was difficult because of the differences between the home and the

host country created barriers for knowledge transfer. Most of the expatriates that participated

in the survey disagreed with the statement that the transfer of knowledge was difficult because

29

the whole expatriation process did not work well in the company. The expatriates believed

that the transfer of knowledge was difficult because there were no formal procedures in their

company. The average rating was 5,04 and represented the highest average rating of all the

eight statements. Most of the respondents disagreed to the statement that the transfer of

knowledge was difficult because the expatriate himself had problems to communicate their

knowledge that they gained on their international assignment.

When only including failed expatriates the following answers were collected:

The failed expatriates expressed that one major barrier to knowledge transfer was that the

expatriation process in general did not function well. 36,8% strongly agreed to this statement.

31,6% of the failed expatriates strongly agreed to the statement that knowledge transfer was

difficult because of the absence of formal mechanisms. The average score was 5,41 which

30

represented the highest average rating of all the statements. The statement that most failed

expatriates strongly disagreed to was transfer of knowledge was difficult because I had

difficulties communicating my knowledge. 61,9% strongly disagreed to this statement.

31

5 Analysis In this chapter the results presented in the previous section will be analyzed using the theory

presented in section two. This section deals with the analysis of international assignments,

repatriation as well as knowledge transfers and exploitation. The end of each subsection will

deal with the results from the expatriates that failed their assignment abroad. Only the

deviations from the previously presented results will be investigated, i.e. results that are the

same or almost the same for failed and successful expatriates will not be repeated.

5.1 International assignments

Bolino (2007) found evidence suggesting that CEOs with experience from international

assignments are more likely to be more effective at managing MNCs. We are not able to tell if

managers or CEOs are more effective, but the companies seem to believe that they are. Our

study shows that 51,7% of the expatriates returned to a position with higher status after their

international assignment. Only 11,5% returned to a position with lower status.

One of the studies done by Tung (1982) highlighted the importance of family and the familys

situation to successful performance. This study suggested that it was necessary to include the

candidate's spouse in the assessment when the company tries to determine the candidate's

suitability for expatriate assignments. We are not able to say if family problems affect the

performance of the expatriate since we have not been able to measure this, but we are

however able to say something about the occurrence of family-related problems. In our study,

75,9% brought their families with them on their international mission. Out of these 75,9%,

34,8% expressed that their family had problems to accommodate to local conditions.

The proportion of families of failed expatriates that had problems to accommodate to local

conditions was almost twice as large as the proportion of families of the successful expatriates

(53,3% for failed expatriates compared to the successful 29,2%). These numbers might

indicate that the family situation is an important factor that influences if the expatriate mission

is successful or not. This might in turn also influence the knowledge transfer since evidence

presented later in this analysis will point out that the knowledge of failed expatriates to a

lesser extent is transferred and exploited by MNCs.

32


It is of high importance that the repatriation process within the MNC functions since this

process effects the expatriates decision to stay in the company. Earlier research has

highlighted two factors as very important in the repatriation process, namely the expatriates

expectations and their opportunities to career advancement. This following analysis is going

to show if these two factors also had an effect on the knowledge exploitation within the

investigated MNCs.

5.2.1 Expectations According to Bolino (2007), repatriate turnover is likely to be high in organizations that are

unable to meet the expectations of the expatriates who have returned home. One way to make

sure that the repatriation process is made as easy as possible for the employee is to make sure

that the employee has got realistic and accurate expectations (Lazarova & Cerdin 2007).

Expatriates in our survey were asked if their repatriation process met their expectations. They

graded their answers on a scale from one to seven, where one represented not at all and

seven very much. The average rating of the answers was 4.66. This would represent a yes

answer to the question, but there still is a considerable amount of answers that are more

directed towards a not at all answer. It seems that managers do have somewhat realistic

expectations, but clearly work needs to be done in this area.

Of the expatriates that answered not at all on the statement did your repatriation process

meet your expectations 66,7% felt that they had transferred knowledge to their co-workers.

In contrast, of the expatriates that had answered that their expatriated process met their

expectations very much 76,9% felt that they had transferred knowledge to their colleagues.

The expatriates that expressed that their expatriation had met their expectations also had a

higher average on almost all the statements about knowledge exploitation. These results

suggest that expatriates that feel that their expatriation process met their expectations actually

are able to transfer more knowledge but also that their knowledge in general also is more

exploited, compared to the expatriates that did not think that their repatriation met their

expectations at all.

5.2.2 Carrier opportunities Bolino (2007) found evidence suggesting that former expatriates often are extremely

frustrated and disappointed when they come home because many find that their employers do

33

not value their international experience. The results from our survey suggest that this is not

the case. 76,1% received a financial bonus that was connected to the international assignment.

When asked to evaluate the statement I have been assigned to a position within the company

that takes advantage of my specific international knowledge on a scale from one to seven

where one represented not at all and seven very much, 47,1% answered with a six or a

seven. This suggests that expatriates do feel that the company values their international

experience. There are however several possible reasons to why we reach different results than

previous research have done. We have only been able to reach those expatriates that stayed

within the company after their repatriation. Maybe the reason that they stayed with the

company was because they felt that the company took advantage of and valued their

international experience. Maybe those that did not think this was the case left the company.

When expatriates were asked to describe the mechanisms applied by their company to transfer

the competences accumulated during their mission abroad, most said that this was part of their

new position that they were offered when they came back. One said: not aware of formal

ways, but in principle try to place people in a position where they can contribute with gained

experience. Others gave similar answers such as; used in new position, part of the new

job position and it was more the type of job I was offered than any specific mechanism.

This suggests that it is up to the employee to make sure that the appropriate knowledge is

exploited and transferred.

Common repatriation problems that the expatriate generally experiences are loss of status,

loss of autonomy and loss of career direction (Selmer, Ebrahimi, & Mingtao 2002).

According to Lazarova and Cerdin (2007) many expatriates feel that they have been offered a

limited amount of career options and are rarely considered for promotion. Our study suggests

the opposite. Expatriates were asked to evaluate the statement After your time abroad, your

opportunity to career advancement has: on a scale from one to seven where one represented

decreased, four the same and seven increased. 52,3% answered with a six or a seven,

indicating that a majority of the expatriates believed that they were now in a better position

for career advancements and promotions than they were before they left on their international

assignments. Once again it is important to mention that we only were able to contact those

expatriates that stayed with the company. It is possible that those that did not feel that they

were in position where they were considered for promotions after they returned left the

company and looked for other employment elsewhere.

34

75,6% of the expatriates that returned to a position with higher status felt that they had

transferred knowledge to their coworkers. Only 20% of the expatriates that returned to a

position with lower status felt that they had transferred knowledge to their colleagues. 77,8%

of the expatriates that expressed that they had been given a position that takes advantage of

their international experience felt that they had transferred some knowledge. Of the

expatriates that did not feel they had been assigned for such a position upon return the same

figure was 20%. These results indicate that career opportunities actually have an effect on the

exploitation of knowledge in the investigated MNCs.

There are some differences concerning career opportunities between those that succeeded and

those expatriates that failed their mission. The expatriates were asked to evaluate their career

opportunities after their international assignments on a scale from one to seven. The average

rating among expatriates that failed was 5,18. The average rating among the successful

expatriates was 5,51. This suggests that successful expatriates thought that their opportunity

to career advancement had increased slightly more than the failed expatriates thought. Most

of the failed expatriates, 40,9%, returned to a position with a higher status after their

assignment abroad. 31,8% returned to a similar position while 13,6% returned to a position

with lower status. In contrast 54,1% of the successful expatriates returned to positions with

higher status while only 11,5% returned to a position with lower status. This shows that

successful expatriates were given better positions upon return than failed expatriates did.


Studies done on knowledge transfers in general and knowledge transfer of expatriates

knowledge in particular have highlighted many different factors that can affect the transfer

and exploitation of knowledge within MNCs. The literature review mentioned many different

factors but is sum five main factors were highlighted, namely type of knowledge, formal

mechanisms, informal mechanism, organizational culture and structure as well as country

specific factors.

5.3.1 Type of knowledge

Colings, Scullion and Morleys (2007) as well as Lazarova and Cerdins (2007) studies have

illustrated that expatriates are a key recourse when it comes to gain more knowledge. Our

study showed that the expatriates mostly gained knowledge about the market during their

35

assignment abroad. 67% gained knowledge about the market, 29,5% about the specific unit

they worked in and only 3,4% about technology. 61% of the expatriates that mostly gained

knowledge about the market felt that they had transferred knowledge to their colleagues while

the same figure was 68% for the expatriates that mostly received knowledge about the unit.

All the expatriates that mostly gained knowledge about technology felt that they hade

transferred knowledge to their co-workers. These results suggest that knowledge about

technology is the easiest type of knowledge to transfer. However, only three of the 93

respondent had actually answered that they had transferred knowledge about technology. As a

result, the findings from this question are inconclusive and more research needs to be done in

order to tell what type of knowledge is most easily transferred to co-workers.

64,4% of all the respondents in our study felt that they had transferred knowledge to their co-

workers. Only 54,5% of the failed expatriates felt that they had transferred any knowledge to

their co-workers while 67,2% in the group of successful expatriates felt that they had

transferred knowledge to their colleagues. These results suggest that an early return from a

mission abroad actually can have an affect of the transfer of knowledge within MNCs.

5.3.2 Formal mechanisms

Berthoin (2001) presented three main barriers to the transfer of expatriate knowledge in his

research. The first barrier was linked to the process of organizational learning and Berthoins

study showed that the absence of formal mechanism was one of the reasons to why the

transfer of expatriate knowledge was difficult. This problem was also highlighted by

Kamoche (1997) and Downs & Thomas (1999) who both acknowledged the importance of

formal mechanisms in order to exploit the expatriates knowledge. Our study demonstrated, in

accordance with Berthoins study, that formal mechanisms for knowledge transfer were

missing in MNCs. 96,5% of the expatriates in our study answered that their company did not

have any formal mechanisms for knowledge transfer. Only three people out of 93 expressed

that their company had formal mechanisms for knowledge transfer. This result was also

supported by the fact that 77,8% of the expatriates answered not at all to the statement I

wrote a formal report on my mission abroad. 31,8% of the respondents also answered not at

all on the statement the company evaluated my experience abroad when I returned home.

In addition, when asked about the barriers connected to knowledge transfer the most common

answer was that the transfer of knowledge was difficult because there were no formal

procedures. All these results give support for what Lazarova and Cerdin (2007) Bonache

36

and Brewster (2001), as well as Bolino (2007) all acknowledged. These researchers have

argued that the exploitation of knowledge is an ignored issue within MNCs.

There could be many reasons to why MNCs do not apply any formal mechanisms to exploit

expatriates knowledge. The company could for example lack time and money or they might

not have realised the benefits of exploiting expatriate knowledge. What is interesting to note

is that many expatriates answered none that I know of when they were asked to describe the

formal mechanisms used in the company to exploit knowledge. These answers could simply

mean that there are no such formal mechanisms in the company but it could also mean that

the companies are not very good at informing their employees about what support actually

exists within the organization. If a MNC have realised the importance and also have the

recourses to develop formal mechanisms an additional problem could however arise. It could

become difficult to actually form and develop these mechanisms. Nonaka (1991), Riusala and

Suutari (2004) and Tsang (1999) have highlighted the difficulties of turning tacit knowledge

into explicit knowledge that the whole organization can learn from. Hence, even if there are

formal mechanisms of knowledge transfer within the company it can be hard for expatriates to

transfer this knowledge since the knowledge can be very hard to codify.

Berthoins study (2001) highlighted that the transfer of knowledge could be difficult if the

expatriation process in general did not work well. For example the expatriates in Berthoins

study expressed that bad relations with managers during their assignment abroad negatively

affected their ability to contribute to the organizational learning when returning. Our study

showed somewhat mixed and inconclusive results concerning this issue. When asked to rank

the statement transfer of knowledge was difficult because the whole expatriation process did

not work well in my company the respondents average score was 3,31. As a result, our

study does not give support nor reject this argument. However, when only analyzing the

failed expatriates the results were somewhat different. 36,8% of the expatriates that failed

their assignment abroad strongly agreed to the statement transfer of knowledge was difficult

because the whole expatriation process did not work well in my company. Only 5,1% in the

sample of successful expatriates strongly agreed to this statement. The average score on this

statement was 4,44 for the failures and 2,91 for the successful expatriates. These results

suggest that it is not only important to develop formal mechanisms of knowledge transfer in

order to exploit knowledge, but that it is also of importance to incorporate these in a wider

37

expatriate program that supports the expatriate during the whole expatriation and repatriation

period.

What is important to acknowledge is that our sample consists of large MNCs and as a result

formal mechanism could exist in some units of the MNC but not in other parts. For example

one expatriate expressed that there were no formal mechanisms of knowledge transfer but

added in my unit at least.

5.3.3 Informal mechanisms

Riusala and Suutari (2004), Mezias and Scandura (2005) as well as Berthoin (2001) have all

acknowledged the importance of relationships, informal communication and mentorship for

transferring and exploiting knowledge within the MNC. The results in our study support this

argument. Even if 96,5% of the respondents answered that there were no formal mechanisms

of knowledge transfer 64,4% of the respondents in our study felt that they had transferred

knowledge to their co-workers. These results suggest that despite the fact that many MNCs do

not seem to have formal mechanisms for knowledge transfer expatriates do transfer

knowledge to their co-workers. According to our study the transfer of knowledge seems to

occur through informal mechanisms instead of formal mechanisms. For example, one

expatriate expressed that own initiative was the main mechanism for knowledge transfer,

another respondent highlighted personal networks as a mechanism of transferring

knowledge while a third expatriate answered random, co-workers are not too interested

when asked to describe the mechanisms of accumulating expatriate knowledge.

5.3.4 Individual factors

Berthoins research also highlighted the problems connected to the individuals such as

interpretation and communication expatriate knowledge. Berthoin (2001) found in his

research that it was hard for the expatriates to get their co-workers at home to understand their

new knowledge since they interpreted the knowledge differently. However our study showed

that 22,4% of the expatriates strongly disagreed to the statement transfer of knowledge was

difficult because my co-workers at home interpreted the knowledge differently. Important to

note is that 24,7% answered N/A to this statement. Furthermore, 41,7% of the respondents

strongly disagreed to the statement transfer of knowledge was difficult because I had

difficulties communicating my knowledge. These results suggest that interpretation and

communication have not been a major problem for the expatriates in our study. The reason for

38

this could simply be that these expatriates and their co-workers have been very good at

communicating and interpreting the knowledge but it could also have to do with the nature of

the knowledge. Tacit knowledge is as earlier mentioned knowledge that is hard to codify and

teach while explicit knowledge, on the other hand, is more easily shared and formally

communicated. A possible explanation to these results could then be that the expatriates in

our study mainly have transferred explicit knowledge. These answers could also be a result of

the fact that our study concern returning expatriates and not expatriates abroad. Problems of

interpretation and communication could potentially be a larger for an expatriate abroad since

he/she is surrounded by a different environment and culture than the ones that are going to

receive the information are. They are situated in different contexts.

Berthoins research (2001) also showed that when the expatriates could use the new

knowledge in their own context they were also able to convert the knowledge to something

that could be embedded in new organizational structures. Our study illustrates a mixed

picture concerning this issue. When asked to evaluate the question my co-workers have been

able to take advantage of and use the knowledge that I gained abroad in their own context

the average score was 4,14. 10,8% answered not at all while 9,6% answered very much. This

result indicates that in some cases the knowledge of the expatriates became embedded in the

organizational culture because the employees had been able to use and take advantage of the

expatriates knowledge in their own context.

The most interesting difference between the failed and the successful expatriates when it

comes to individual factors is the result on the statement I am aware of the outcome of my

mission abroad. Among the expatriates that failed their assignments 15% were not at all

aware of the outcome of their mission abroad while 0% of the successful expatriates answered

not at all to this statement. When asked to rank the statement transfer of knowledge was

difficult because I had difficulties communicating my knowledge 61,9% of the failed

expatriates answered that they strongly disagreed to these statement. Only 35,6% of the

successful expatriates strongly disagreed to the same statement. These results are puzzling

since it would seem like it should be hard to communicate something that you are unaware of.

However this does not seem to be the case. 15% of the failed expatriates said that they are

unaware of the outcome of their mission but 0% answer that the transfer of knowledge was

difficult because they had difficulties in communicating their knowledge.

39

5.3.5 Organizational culture and structure

Riusala and Suutari (2004), Nonaka (1991) and Berthoin (2001) all acknowledged the effect

that organizational culture can have on the transfer of knowledge. Berthoins study indicated

that the factors needed to motivate and support the learning processes were often missing in

the organizational culture and as a result organisational culture functioned as a barrier.

Riusala and Suutaris study demonstrated, on the other hand, that organizational culture did

not have a negative effect on the transfer of knowledge. Our study showed, in accordance

with Riusala and Suutaris research, that organizational culture did not function as a barrier to

knowledge transfer, according to the expatriates. 19% of the respondents strongly disagreed to

the statement that the transfer of knowledge was difficult because the organizational culture

created barriers for knowledge transfer and 48,7% of the respondent disagreed to this

statement. When asked to evaluate the statement I have been encouraged and inspired by my

company to share and communicate my international knowledge in my everyday work

18,8% of the respondents answered not at all while only 3,5% answered very much. This

indicates that most expatriates believe that the company does not inspire them to share

knowledge gained on their international assignment. These two findings suggest that even if

the organizational culture does not function as a barrier within the investigated MNCs, the

organizational culture within the firms does not inspire them to transfer knowledge. This is of

course troublesome since numerous researchers have found evidence suggesting that the

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