www.socscinet.com/bam/jwb

Journal of World Business 40 (2005) 267–280

Reducing inpatriate managers’ ‘Liability of Foreignness’

by addressing stigmatization and stereotype threats

Michael Harvey a,*, Milorad M. Novicevic a, M. Ronald Buckley b, Helen Fung c

a 332 Holman Hall, Management Department, School of Business Administration,

University of Mississippi, Mississippi, MS 38677, USAb University of Oklahoma, USA

c Al Akhawayn University, Morocco

Abstract

The acceptance of ‘others’ in an organization can be a long and protracted process that can take years. Seldom is there a

smooth assimilation into the corporate ranks for outsiders. Given the increasing number of inpatriate managers arriving in the

domestic organizations of many global organizations, the issues impacting the acceptance of inpatriate managers by home-

country managers will invariably increase. The purpose of this paper is to prescribe a program/process designed to suppress the

stigmatization and stereotyping of inpatriate managers located in the home-country organization, as stereotype threats may

impact not only the performance of the inpatriate managers but also the performance of an organization that is attempting to

globalize its operations.

# 2005 Elsevier Inc. All rights reserved.

Keywords: Liability of foreignness; Inpatriate managers; Stigmatization; Stigma; Stereotype threats; Diversity; Global mindset

‘‘Stigmatization, at its essence, is a challenge to one’s

humanity . . . both the stigmatized person and of the

stigmatizer . . .’’ (Dovidio, Major, &Crocker, 2000,p.1)

1. Introduction

The increase in the globalization of management

has brought about the omnipresent evaluative percep-

tions of foreign professionals located in the home-

country organization of multinational corporations

* Corresponding author. Tel.: +1 662 915 5830;

fax: +1 662 915 5821.

E-mail address: mharvey@bus.olemiss.edu (M. Harvey).

1090-9516/$ – see front matter # 2005 Elsevier Inc. All rights reserved

doi:10.1016/j.jwb.2005.05.004

(MNCs). Influenced by additional security concerns,

home-country nationals tend to develop a checklist of

questions relative to the incoming foreign managers,

such as: Who are these foreigners (i.e., where do they

come from)? What are the foreigners going to do while

they are here? Where are the foreigners going to work

while in the country/organization? Why are the

‘foreigners’ here? How are the foreigners going to

impact me, my job, and the organization? And the one

central concern relative to the ‘invasion’ of foreigners

is: ‘‘When are they going back home?’’

The phenomenon of ‘collective reservation’ toward

foreigners, coincides the increase in the utilized of

inpatriate managers. Inpatriates are host/third country

.

M. Harvey et al. / Journal of World Business 40 (2005) 267–280268

nationals relocated to the home organization on

permanent or semi-permanent basis (Harvey &

Buckley, 1997). Inpatriation is becoming an invalu-

able practice of MNCs attempting to enhance their

corporate knowledge-transfer, coordination and con-

trol capabilities in the home-country organization

(John, Ietto-Gillies, Cox, & Grimwade, 1997). Among

the companies that are pioneering the inpatriation

practice are Italian Fiat (inpatriating French, Belgian,

Spanish, and Lebanese managers into the senior

management team) and Dutch Shell (having inpatri-

ates of 38 nationalities located at its headquarters)

(Feely & Harzing, 2003). Some United States based

MNCs are presenting even stronger globalization/

diversity signals by posting foreign-born CEOs in

traditional American organizations, such as; McDo-

nald’s CEO Charles Bell an Australian, Coke-Cola’s

new CEO, E. Neville Isdell, an Irish citizen, Kellogg’s

CEO Carlos Gutierrez, born in Cuba, Schering-

Plough’s CEO Hassan, born in Pakistan, are becoming

emblematic of the new generation of global managers

(White, 2004).

The episodic resistance toward the integration of

inpatriate managers and their career progression to

management positions in the home-country organiza-

tion might possibly turn into an unspoken but

concerted form of ethnocentric stigmatization and

stereotyping (Harvey & Buckley, 1997). If such

cultural bias becomes widespread it can impact

negatively not only the future contributions of

these inpatriate managers but also the image of

organizations attempting to infuse diversity into their

management perspective. Diversity of management

background and experience is rapidly becoming the

enabler of global reach and scope for organizations

(Bartlett & Ghoshal, 1995; Ghoshal & Bartlett, 1997;

Gregersen, Morrison, & Black, 1998; Hitt, Keats, &

DeMarie, 1998) Therefore, developing a program to

manage the issues of the inpatriate ‘liability of

foreignness’ becomes a pressing need for organiza-

tions committed to developing a global mindset

(Kefales, 1998; Kedia & Mukherji, 1999; Paul, 2000;

Feely & Harzing, 2003).

The purpose of this paper is to develop a program/

process that addresses the issues of the potential of

‘liability of foreignness’ of inpatriate managers and

the problems surrounding their stigmatization. The

process developed in the paper suggests how a

program can be implemented to suppress the ‘liability

of foreignness’ issues and problems that face

inpatriate managers. As a result, a step-by-step

process for implementing a ‘liability of foreignness’

program in global organizations is the primary

contribution of the paper to the literature. To gain

additional insights into the development of a process

to address the liability of foreignness of inpatriate

managers, we first explore the potential stigma

attached to being a foreigner in the home-country

organization.

2. The rapid globalization of organizations and

the development of a pluralistic global

management mindset

The globalization of markets presents a difficult

challenge for organizations attempting to compete

in the global marketplace. In response to global

opportunities, organizations are shifting from econo-

mies of scale to economies of scope and attempting to

develop global mindset through management diver-

sity. The development of a pluralistic global mindset is

perceived by some to be the ultimate means to

differentiate an organization’s competitive posture on

an on-going basis (Kefales, 1998; Kedia & Mukherji,

1999; Paul, 2000; Feely & Harzing, 2003).

Pluralism evolves when distinct ethnic, religious or

cultural groups and their alternatives views of

thoughts, opinions and actions are accepted and

tolerated within a society. When a management team

recognizes pluralism it indicates the acceptance of

alternative thoughts, opinions and actions within the

organization’s culture. The benefit of pluralism is that

it fosters an environment of mutual respect (Tung,

1993). Diversity thrives on pluralism when both

domestic and inpatriate managers in the pluralistic

organization embrace shared norms of cooperation

amongst themselves. This shared mindset is conducive

to developing alternatives in solving problems,

nurturing pride in collaborative work outcomes and

ultimately, celebrating successes in global initiatives.

Furthermore, a pluralistic climate of diversity-based

success is ultimately sustained with increased profit

and satisfaction of both consumers and employees.

Given the increase in the perceived difficulty

associated in inpatriating managers and the associated

M. Harvey et al. / Journal of World Business 40 (2005) 267–280 269

risk of their stigmatization, the challenge is to design

an effective training/monitoring program that could

elicit pluralism in the home-country organization. A

program designed for avoiding inpatriate stigmatiza-

tion and stereotyping should provide answers to the

following four questions: (1) are the stipulated policies

and procedures of the organization producing the

desired diverse thinking/behaviors; (2) are the

stakeholders (e.g., including employees) within the

organization reducing the limitations on their think-

ing/behavior; (3) is management artificially forcing

boundaries on organization strategy; and (4) is the

organization consistently re-inventing itself to where

its culture is never ‘‘settled’’ or static (Novicevic &

Harvey, 2001). The multicultural work environment

created by the inpatriation of managers is dependent

upon positive approaches to addressing these four

issues.

When a successful program is designed and

implemented ensuring that pluralism is embedded

in a domestic organization, home-country managers

will ensure that they are treating inpatriates with

respect and accepting differences in a proactive

manner (Feely & Harzing, 2003). By approaching

newcomers in this fashion, home-country managers

will treat newcomers positively and in a manner

supportive of increasing their level of satisfaction in

the home-country organization. The inpatriate man-

agers, responding positively/proactively to the way in

which they were treated, will experience a high level

of satisfaction with the home-country organization,

exhibit and accelerated adjustment to the home-

country, and improve their performance.

In effect, pluralism will likely limit ‘liability of

foreignness’ of inpatriate managers that are relocated

to the home-country of the organization. As individual

inpatriates are accepted in an organization, they will

enjoy both the freedom of diversity and the pluralistic

culture of interactions with domestic managers.

The nurturing relationship between home-country

nationals and inpatriates will be passed along to

subsequent newcomers to the organization. The result

will be a suppressed stereotype threat and reduced

‘liability of foreignness’ in the culture of the domestic

organization and the potential for improved organiza-

tional performance (Ng & Tung, 1998).

When inpatriate managers are transferred to the

home-country organization, their knowledge, cul-

tural/social perspectives, and diversity of experience

should be viewed by the local home-country

managers as value-added. If such a view is not

prevalent, isolating negative stereotypes will be

ascribed to these immigrant managers by the home-

country management. Ethnophaulism (i.e., to dis-

parage a national group or to exclude from social/

cultural acceptance or to use ethnic/nationality slurs

to refer to out-groups) (Mullen & Johnson, 1993;

Mullen, 2001) by home-country nationals could

undermine the value of ‘importing’ inpatriate

managers’.

If these inpatriate managers are relied upon to

provide the diverse input necessary to developing a

global mindset for the organization, there should be

programmatic efforts to reduce the reaction of

local nationals to discounting/dismissing inpatriate

managers and their unique and valuable input to

decision-making (Welch, 1994; Stroh & Caligiuri

1998; Gregersen, Morrison, & Black, 1998). The

level of ethnophaulism and the social distance

between countries can serve as a broad indicator

of a link between how members of the receiving

society think about ethnic/national immigrants and

how members of the receiving society behave

towards these immigrants (Mullen & Johnson,

1993; Mullen & Nichols, 2000; Mullen, Rozell, &

Johnson, 2000).

Traditionally, domestic managers were expatriated

to develop a degree of a global mindset (i.e.,

developing and maintaining multiple coherent per-

spectives to allow them to address complex global

problems). This capacity will be even more critical in

the domestic context because of the increasing need to

reduce the potential bias of ethnocentrism when

managing in the global market arena (Tung, 1995;

Aguirre, 1997; Harvey, Speier, & Novicevic 1999).

Effectively acculturating inpatriate managers into a

domestic organization is becoming a hallmark of

global leadership development (Hedlund, 1986;

Harvey & Novicevic, 2001). A lingering issue

concerns why inpatriate managers are frequently

viewed as not being equal to the home-country

managers but rather stereotyped as out-group mem-

bers with the ascribed need to overcome their ‘liability

of foreignness’? To gain insight into why inpatriate

managers might/will experience levels of the ‘liability

of foreignness’ once relocated to the home-country of

M. Harvey et al. / Journal of World Business 40 (2005) 267–280270

the organization it becomes imperative to examine the

basis of stereotyping and stereotyping threat.

3. A psychological foundation of stereotyping

and stereotype threats

The term stereotype is composed of two ancient

Greek terms—stereos, which is a Greek prefix that

means rigid and solid, and typos, which means letter,

type, and character (Kubler, 1941). Walter Lipper-

mann’s book Public Opinion (1922) was the first work

that introduced the term ‘‘stereotype’’ into the social

sciences. In Lippermann’s book, stereotypes are defined

as ‘‘pictures in our heads’’, i.e. our shared mental

representations that facilitate our individual perceptions

of complex environments. Stereotypes elicit shortcuts

that supplement our ‘cognitive efficiency’ when

forming positive and negative stereotyping categories

(e.g., foreigners are commonly good in quantitative

skills, but poor in interpersonal skills) (Fiske, 1998;

Crocker, Major, & Steele, 1999; Link & Phelan, 2001).

When negative stereotypes are implicitly commu-

nicated by the powerful individuals or groups, their

impact on the targeted individual/group becomes

tangible over time through their declined self-esteem

and self-efficacy in accomplishing tasks. This decline

occurs because stereotyping can be inculcated by the

targeted individual/group to become a permanent

stereotype threat. This may possibly be manifested as

an increased performance pressure exerted upon them

by the powerful others when performing a given task,

for which their competence is socially stereotyped

(Steele, 1997; Brown & Pinel, 2003).

Stereotype threat is a social-psychological phe-

nomenon experienced by some individuals and/or

groups when performing in a domain where negative

stereotypes about their social standing are salient

(Steele & Aronson, 1995; Steele, 1997; Fiske, 1998).

Situational pressure caused by the stereotype is likely

to provoke anxiety as targeted individuals perceive

that they are being judged stereotypically, treated

stereotypically, or presumed behaving stereotypically.

A closely related construct to stereotype threat is

stigma, which is a social regulatory tactic the majority

use to identify those who deviate from the majority

standard (Pinel, 1999, Crocker, Major & Steele, 1999).

According to Dovidio, Major, and Crocker (2000), in

contrast to stereotyping, stigma is situation-dependent

because an attribute can be enacted as salient in one

situation but not in another.

Stigmatization is focused on some easily recogniz-

able characteristic, such as race, weight, (dis)ability,

gender or nationality (Zebrowitz, 1996), so that

individuals who process these attributes can be

stereotyped (positively or negatively) according to

some specific societal standards (Fiske, 1998). For

example, femininity is a valuable positive attribute in

nursing or teaching occupations, but not in traditionally

male-dominated occupations, such as engineering or

sciences. The entangled relationship between stigma-

tization and stereotype threat develops ‘‘when members

of a stereotyped group (are) in situations in which the

stereotype could be applied to them – used to judge

them or their ability in some way – their knowledge of

the stereotype and the features of the situation may

combine to affect feelings about themselves, as well as

stereotype-relevant performance’’ (Crock & Quinn,

2000, p. 166). Therefore, stigmatization of one’s group

cognitive ability is a necessary, but not sufficient

condition for individuals to experience stereotype threat

because the cues from the situation need to be relevant

for the individual’s knowledge (Steele & Aronson,

1995Steele & Aronson, 1995).

As a means to illustrate the impact of stereotyping

threat, researchers have examined the impact of race,

socio-economic status (SES) and gender on perceived

cognitive ability. Empirically, researchers have found

that psychological factors could account for the

persistent academic performance gap between black

and white students (Jencks and Philips, 1998; Roth,

Bevier, Bobko, Switzer & Tyler, 2001). Using

Stanford University undergraduate students, Steele

and Aronson (1995) reported black students per-

formed poorer on a cognitive ability test than white

students when they thought it was a diagnostic test.

Black students in the diagnostic condition exhibited a

lower performance relative to black students in the

non-diagnostic condition. However, both black and

white students performed similarly in the non-

diagnostic condition. Further, high SES students were

generally regarded as more intelligent than low SES

subjects. A cognitive-ability test performance gap was

also found between students from low and high socio-

economic backgrounds (Croziet & Clarie, 1998; Roth,

Bevier, Bobko, Switizer, & Tyler, 2001).

M. Harvey et al. / Journal of World Business 40 (2005) 267–280 271

Stigmatized individual performance was also found

in stereotypical gender performance domains. Brown

and Joseph (1999) found both genders had poorer

mathematics performance in conditions that high-

lighted negative stereotype traits of their respective

gender groups. Spencer, Steele, and Quinn (1999)

observed females performed poorer than males on a

math test when the test was introduced as one that

accurately measured gender differences in mathema-

tical ability. Recently Kray, Thompson, and Galinsky

(2001) found females performed poorer on a negotia-

tion exercise when negotiation ability was described

as ‘masculine’. Furthermore, researchers observed

stereotype threat could undermine individuals’ expec-

tations of future performance regardless of their initial

ability beliefs (Chan, Schmitt, & DeShon, 1997;

Stangor, Carr, & Kiang, 1998; Chan, Schmitt, &

Sacco, 1998).

Stereotype threat was found to have a robust effect

on stigmatized individuals’ performance outcomes in

a number of settings (Wigdor & Sackett, 1993; Guion,

1998). Such an effect can signal important implica-

tions in personnel selection because the stereotype

threat effect could account for the gap typically found

in occupational cognitive test taking ability of

stereotyped individuals, such as inpatriate managers

to a country (Guion, 1998; Jenck, 1998; Roth, Bevier,

Bobko, Switizer, & Tyler, 2001). Specifically, stereo-

type threat might relate to nationality differences in

motivation, behavior and resulting performance.

Stereotype threat could be the causal variable in

performance differences. As stereotype threat is a

potential source of variance for the performance gap

on cognitive ability testing of stereotyped individuals

and/or groups; identifying and reducing stereotype

threat is an important step in addressing test bias and

the potential adverse impact (Guion, 1998, Wigdor &

Sackett, 1993).

Stereotyped recipients’ reactions to feedback can

also affect their motivation, persistence, and effort

relative to future assignments (Stevens & Gist, 1997;

Colquitt & Simmering, 1998; Elliot, McGregor, &

Gable, 1999; Harackiewicz, Barron, Tauer, & Elliot,

2001, 2002; Steele-Johnson, Beauregard, Hoover &

Schmidt, 2000). If the stereotype threat can not be

concealed relative to one’s race or nationality, then the

threat becomes real to those expected to perform. This

is of particular interest if the threatened individuals

like inpatriate managers are critical to the future

success of the organization.

In summary, a common finding of these studies is

that stereotype threat has a robust effect on

stigmatized individuals’ performance outcomes in

various settings. This has important implications for

human resource management because the stereotype

threat effect could account for the racial and other

types of gaps typically found in occupational cognitive

ability tests (Guion, 1998; Jenck, 1998; Roth, Bevier,

Bobko, Switizer, & Typler, 2001). Specifically,

stereotype threat might relate to racial/nationality

differences in test taking motivation and behavior. As

these differences could be the unmeasured variables

causing mean performance differences, stereotype

threat effect is a potential source of variance for the

racial/nationality performance gap on cognitive ability

testing. Therefore, identifying and reducing stereotype

threat is an important step in addressing bias and

adverse impact on inpatriate managers (Guion, 1998,

Wigdor & Sackett, 1993), which is of high relevance

for global organizations striving to improve their

performance through the inpatriation process of

increasing the diversity of their management teams.

The central question is how is stigmatization and

stereotyping fundamental to the ‘liability of foreign-

ness’ question associated with inpatriate managers?

4. The stigma associated with the ‘Liability of

Foreignness’ of inpatriate managers

Stigma refers to a mark or an attribute linking an

individual or a group to undesirable characteristics

that are socially represented by stereotypes (Link &

Phelan, 2001). The stigmatized individual/group is

assumed to possess some attribute, or characteristic,

which conveys a social identity of lower value in the

eyes of the powerful others in the society (Goffman,

1964; Croizert & Claire, 1998). Stigmatization is a

form of collective representation that is known by

both the stigmatized and the non-stigmatized as

being different or of less value by the prevailing

norms in a society (Cooley & Schubat, 1998).

Stigmatization is contingent on the stigmatizer

having access to power (i.e., social, political,

economic) that allows the development of the nature

of the differences to influence the separation of those

M. Harvey et al. / Journal of World Business 40 (2005) 267–280272

with the stigmatized characteristics for disapproval,

rejection, exclusion, and potentially discrimination

(Link & Phelan, 2001).

Stigma is a multidimensional construct consisting

of six dimensions, which are: (1) concealablity—the

level of visibility of the distinguishing mark or

attributes used in the stigmatization of the individual;

(2) course of the mark—is the mark increasingly

debilitating over time to the individual; (3) disrup-

tiveness—of the mark in interpersonal interactions; (4)

aesthetics—the degree of ‘disfigurement’ or unattrac-

tiveness of the stigma mark or attribute; (5) origin—of

the stigma attribute, for example, is it congenital,

accidental, intentional, or imagined; and (6) peril—

the danger associated with the stigmatized individual

to others (i.e., AIDS patients, leper or similar

contagious diseases) (Deaux, Reid, Mizrahi, &

Eithier, 1995; Dovidio, Major, & Crocker, 2000).

The perceiver’s assessment of these six dimensions

capturing the ‘severity’ of the stigma may evoke the

target (e.g., individual or group) of the stigmatization

to react to the stigmatizing disapproval and stereo-

typing cognitively, affectively and/or behaviorally

(Gonzales, Blanton, & Williams, 2002; Dovidio,

Major, & Crocker, 2000).

Some classes of disapproval or stereotyping that are

culturally based may even be at a preconscious level,

often engendered by visual cues or shortcuts for

devaluing individuals by just observing and labeling

their attributes (i.e., race, ethnicity, nationality). This

downgrade of status or devaluing of an individual or a

group in a status hierarchy may become a tangible

form of discrimination, as it creates negative stereo-

types of individuals and groups that appear different or

act differently relative to the prevailing cultural norms

(Mullen, Salas, & Driskell, 1989). If labeling and

stereotyping lead to discrimination of stigmatized

individuals or groups, a ‘disabling’ social environment

is facilitated. This environment can impact the

performance and limit the potential of the discrimi-

nated individual/group (Fine, 1998). The current

tendency of Westerners to stereotype and devalue

Arabic people, following the recent wave of terrorist

acts performed by Muslim extremists, illustrates this

point. Although the militant extremists deserve both

stigmatization and condemnation, the systemic risk of

security concerns has caused a wider spillover of

stigmatization.

Any stereotyping engendered by stigmatization of

individuals and groups consists of an array of shared

beliefs and attributes that categorize, justify, and

maintain the individuals as members of such groups

that have devalued characteristics (e.g., race, gender,

disability, nationality) (Druss, Bradford, Rosenheck,

Radford & Krumholz, 2001; Link & Phelan, 2001).

When these arrays of beliefs and values become a part

of the wider collective representation, the individuals

with the stigmatized attributes are likely to be

inculcated with the ways in which powerful others

perceive their group (Crocker & Quinn, 2001). There-

fore, social stigma with negative stereotypes may

significantly distort the self-concept of members from a

targeted group(s), when their ‘negative’ attributes are

widely shared in a society. One such attribute is

‘foreignness,’ which becomes a liability when inpatri-

ates attempt to construct professional or managerial role

identity in the domestic organization of their new

country. To gain addition insights into the potential for

stigmatizing inpatriate managers, the detailed complex-

ities of the ‘liability of foreignness’ need to be explored.

5. Examining in more detail the complexities of

the ‘liability of foreignness’ phenomenon

associated with inpatriate managers

In line with the most recent research trend (Allison,

1998; Miller & Major, 2000; Miller & Kaiser, 2001),

stigma and stereotype threat can be viewed as stressors

faced by inpatriates. This view accentuates the need

for inpatriate ‘‘cognitive appraisals in the experience

of stigmas related stress and the coping responses

made to that stress’’ (Miller & Kaiser, 2001, p. 73).

The ways in which stigmatized and stereotyped

inpatriates may cope with the stress engendered by

their devalued status in the home-country organization

could be helpful in designing a process/program to

facilitate effective coping responses (Shih, 2004).

An effective program facilitating inpatriate apprai-

sals and coping may suppress the consequences of

stigma-related stressors (e.g., low self-esteem, exter-

nal locus of control and depression) to free inpatriate

adaptive resources for productive use. For the design

of such a program, it is important to bear in mind that

stress responses vary not only in nature (i.e.,

psychological, cognitive, emotional, and behavioral)

M. Harvey et al. / Journal of World Business 40 (2005) 267–280 273

but also in orientation (e.g., voluntary–involuntary,

engaged–disengaged, problem-focused or emotion-

focused) (Zeidner & Endler, 1996). Consideration of

the variety of stress and coping responses is necessary

to design a program of their effective facilitation with

inpatriates. The program design should however be

extended to ensure the inpatriate acceptance by the

home-country nationals.

Inpatriate stereotyping and stigmatization can be

moderated by various events including home-country

managers’: (1) motivation to form and maintain

positive intercultural relationships; (2) efforts to

promote counter-stereotypes; (3) focus of attention;

and (4) contextual cues (Blair, 2002). One way to

frame these moderators associated with inpatriate

managers working in the home-country of an

organization is to examine how they could counter

the country-of-origin/liability of foreignness effects

that Hooley, Shipley, and Krieger (1998) claim are

contained in the four dimensions surrounding the

relationship between the image of a country and the

image of products and/or individuals that come from

that country (see Fig. 1).

Fig. 1. Country-of-origin and impact on

The first dimension, the belief that inpatriate

managers of the similar origin are largely homo-

genous, implies that home-country citizens will

perceive the quality of nations from which inpatriates

originate is roughly the same as the home-country. For

example, inpatriates from the United Kingdom may be

perceived as quality managers. Conversely, inpatriates

from Zimbabwe may be perceived as lower quality

managers than home-country managers. Home-

country organizations can use this rough indicator

and recognize the potential problems of accepting

inpatriate managers from diverse countries (i.e.,

acceptable/similar/unacceptable compared to the

home-country).

The second dimension, the perception of manage-

ment education, training and experience, may vary

from country-to-country, suggests that France’s rank-

ing of inpatriate managers will differ from those of the

United States for the same set of inpatriate managers.

As the United States system may not be perceived as

international, this point may appear to be moot.

However, because of the diversity of the United States

population and the reality that certain ethnic groups

acceptance of inpatriate managers.

M. Harvey et al. / Journal of World Business 40 (2005) 267–280274

are congregated in certain areas of the country (e.g.,

the French speaking population in New Orleans,

Louisiana), there will be cultural differences in these

areas that depart from traditional national perceptions

(Tung, 1993). Thus, organizations located in these

specific areas of the country could take into account

the differences in perception which may lead to

exceptions to the level of acceptance of inpatriate

managers’ education and experience.

The third dimension, denoting that the passage of

time can significantly change the perception of

managers over a timeframe, illustrates that the

home-country’s perception of inpatriate managers

today can change over time. Home-country organiza-

tions cannot assume that the perception of inpatriate

managers remains constant over time. Thus, constant

monitoring of perceptions specific to inpatriate

mangers will allow home-country organizations to

target inpatriate managers from those countries

perceived to be more acceptable to the home-country

nationals.

The fourth dimension implies that home-country

management could give preferential treatment to

domestic managers over inpatriate managers. Gen-

erally, there will be a preference for home-country

nationals due familiarity and track record of these

managers in the home-country organization. But this

option may be less advantageous in the future in which

the tacit knowledge of the inpatriate managers is

necessary in order to develop a global approach to

performance. In addition, management diversity

becomes the means to develop and adjust competitive

strategy on a constant basis (Simpson, 1995; Palich,

Hom, & Griffeth, 1995; Novicevic & Harvey, 2001).

Addressing these four issues will assist organiza-

tions in their attempts to develop a model for targeting

inpatriate managers that will have less difficulty in

being accepted in the home-country environment and

organization. These issues compel organizations to

prioritize their recruitment of inpatriate managers on

these four different issues and therefore begin to

attempt to limit and then reduce the ‘liability of

foreignness’ that inpatriate managers will experience

during their entry into a domestic organization.

The ‘liability of foreignness’ problem has primarily

been experienced in foreign subsidiary environments

(Calhoun, 2002). Thus, very little research has

explored the issues associated with inpatriate man-

agers being relocated to the home-country organiza-

tion (Matsuo, 2000; Mezias, 2002a). The body of

research on expatriates in subsidiaries focuses on the

adjustment of expatriate managers and the cultural/

social backlash/negative reactions to the expatriate

manager (Mexias, 2002b; Calhoun, 2002; Sethi &

Guisinger, 2002). The issue is whether the importation

of inpatriate managers will follow the same adjust-

ment pattern experienced by expatriates. There are a

number of issues that need to be explored relative to

this ‘reverse liability of foreignness’ trend found in the

home-country organization. There is some indication

that the reaction may be stronger in the home-country,

as illustrated by a recent backlash experienced by

major airlines in the United States that have out-

sourced customer service/reservations to foreign

entities. We would suggest that implementing a

structured process to reduce the ‘liability of foreign-

ness’’ would add competitive advantage to an

organization. That process is examined in detail in

the following section of the paper.

6. A program/process for managing the

‘liability of foreignness’ associated with

inpatriate managers

Home county organization should make a sustained

effort to reduce the impact of the ‘liability of

foreignness’ through recognizing the tendency for

home-country nationals to judge newcomers to an

organization on their perceived degree of difference.

Fig. 1 illustrates the need to determine which countries

to recruit inpatriate managers from based upon the

probability of acceptance by home-country managers

recognizing that acceptance can and more than likely

will vary by country (Fiske, 1999; Bigoness &

Blakely, 1996; Calhoun, 2002). In addition, it is

noted in Fig. 1 that perceptions can change over time

given exposure to incoming inpatriate managers,

therefore, an on-going monitoring of the program is

necessary. Therefore, Fig. 1 can be used in the

development of a program to more effectively

integrate inpatriate managers into the domestic

organization.

The inpatriate program developed below should

allow inpatriates to both cope as well as empower

them by recognizing that overcoming their potential

M. Harvey et al. / Journal of World Business 40 (2005) 267–280 275

stigmatization is not a depleting process but rather a

replenishing and enriching process (Shih, 2004). A

comprehensive program should have elements that

enable the inpatriate to overcome as well as empower

them to more effectively address stereotyping and

stigmatization in the future. Therefore, a step-by-step

process of addressing the ‘liability of foreignness’

could provide the foundation for developing a

proactive program of the home-country management.

Fig. 2 illustrates specific steps in the process and each

step will be briefly discussed (see Fig. 2).

6.1. Assessment of present/future level of need for

foreign nationals

The need for foreign nationals as inpatriates will

vary based upon: (1) the type of organization and (2)

the stage of globalization of that organization. The

demand for diversity and the resulting increase in the

‘liability of foreignness’ is contingent to a degree upon

Fig. 2. A managerial process for addressing inpatriate managers’

the need for varying viewpoints/perspectives from

globally diverse sources of information. This is of

particular importance in situations where there is a

need for globally diverse tacit knowledge in order to

develop effective strategies for the organization. The

greater the cultural distance and the level of difference

in economic development between two countries the

higher the need for inpatriate input. Moreover, as

organizations globalize their operations, the need for a

wider variety of input/knowledge will grow (see

special issues of Strategic Management Journal, 1996;

Journal of International Management, 2002; Organi-

zation Science, 2002; as well as, Nonaka and

Takeuchi, 1995; Nonaka & Teece, 2001; Orlikowski,

2002).

The first step in managing the ‘liability of

foreignness’ in global organizations is to ascertain

the present information needs of the organization and

to anticipate the need for diverse input in the short-run

and in a longer time horizon. It is logical to surmise

‘Liability of Foreignness’ in home-country organizations.

M. Harvey et al. / Journal of World Business 40 (2005) 267–280276

that the greater the need for information/input, the

grater the willingness of management to commit

resources to the transfer of inpatriate managers to the

home-country organization. At the same time, the

potential negative outcome of introducing inpatriate

managers into the domestic organization needs to be

recognized by management (Harvey & Buckley, 1997;

Harvey, Speier, & Novicevic, 1999). This initial

recognition of the ‘liability of foreignness’ can help to

increase the awareness of management as to the

potential negative impact of introducing foreign

managers into the domestic organization. As well

as, to underscore the potential negative reactions and

stereotyping of foreign managers by domestic

employees (Lou, Shenkar, & Nyaw, 2002).

6.2. Determination of strategic markets and

cultural distance/novelty

The need for information will vary by stage of

globalization and the realization that the need for input

will be most valuable for certain markets of strategic

importance. This recognition of the variance in the

importance of information needed is the basis for the

classification of countries/markets concerning from

which countries inpatriate managers could be trans-

ferred to the home-country. Once these target countries

are determined, the level of cultural and economic

distance can be determined and used as a quasi indicator

of the level of foreignness that the inpatriate managers

might expect in the home-country (Hofstede, 1983).

The level of diversity among the foreign nationals to be

‘imported’ to the home-country will also serve as a

guide to the support needed to overcome the difficulties

in socializing the incoming inpatriate managers to both

the internal and external environments (Tung, 1995).

The mix of incoming inpatriate managers/families will

also underscore the level of complexity of the

newcomer problem for the human resource manage-

ment function in the home-country.

The greater the cultural/economic distance of

countries that inpatriate managers are recruited from

the higher the probability of managers being

stigmatized by domestic managers (e.g., the more

novel the culture from that of the home-country the

lower level of acceptance by domestic managers)

(Harvey & Buckley, 1997; Novicevic & Harvey,

2001). The tendency to stereotype out-group members

is heightened due to the greater cultural/economic

distance between the inpatriate and domestic man-

agers. Frequently, the abilities of the inpatriate

manager(s) will be discounted because the domestic

manager(s) perceive the inpatriate as different (there-

fore less quality). This discounting of inpatriate

managers shadows the stigmatization of outsiders

because of a lack of knowledge as well as lack of

acceptance of individual differences (Fiske, 1999;

Calhoun, 2002).

6.3. Assessment of cultural acceptance of

diversity in the home-country organization

As was depicted in Fig. 1, there can be a derived

targeted pool of inpatriate candidates that are more

likely to be accepted in the home-country. These

targeted countries will more than likely be less

culturally novel and have a more similar level of

economic development. By targeting the countries

where inpatriate managers are recruited from, there

will be less likelihood of domestic managers to

stereotype and ultimately stigmatize incoming inpatri-

ate managers (Brown & Pinel, 2003). One of the

primary considerations in the development of a

program for addressing the inpatriate ‘liability of

foreignness’ is to undertake a benchmarking of where

the organization stands relative to diversity and

acceptance of foreigners in the organization. Any

program that is to be developed to socialize inpatriate

managers into the home-country organization is

predicated on the ‘vision’ of diversity and the existing

climate of acceptance of difference in the organization

(Tung, 1993; Ng & Tung, 1998). While there are legal

parameters stipulated in most developed countries

relative to diversity and discrimination, the informal

climate needs to be evaluated and the level of potential

‘stigmatation of foreignness’ determined. In doing so,

human resource management professionals can

determine the level of change that must take place

for the successful integration of inpatriate managers

into the organization.

6.4. Development of dual socialization process for

inpatriates/home-country nationals

It is obvious that there needs to be a socialization

process established for the inpatriate managers to

M. Harvey et al. / Journal of World Business 40 (2005) 267–280 277

assist them in adjusting to the home-country/organi-

zation. For the socialization process of inpatriate

managers to be effective, a complementary training

program should be put in place for the home-country

nationals. This cultural sensitivity training would have

as its goal to reduce the level of stereotyping and

stigmatization which domestic managers could

develop toward inpatriate managers (Brown & Pinel,

2003). While the inpatriate managers will recognize

the need to be socialized into the home-country

organization, there will be a concomitant level of

reluctance exhibited by domestic inpatriate managers

to accept newcomers/outsiders into the informal social

network of the organization.

The process developed for the home-country

nationals could be based on the four phases that the

inpatriate managers will go through in the process of

successfully entering the home-country organization,

as follows:

(1) S

egregation—social distance maintained and is

characterized as a period of learning and

acceptance of differences. Barriers to moving to

the next level in the process of socialization being

overt hostility between groups, lack of a common

body of knowledge and an inability to effectively

communicate. The critical juncture in the stage

being the recognition of the value of tacit

knowledge of the inpatriate managers to the

success of the global organization;

(2) A

ssimilation—modification of behavior by the

inpatriate managers, recognition of the informal

structure and environment in the home-country

organization and increase level/quality of com-

munication between home-country and inpatriate

managers. Barriers to the successful completion

of the phase are different rates of acceptance of

inpatriate managers by clusters of countries of

origin and fear on the part of the home-country

nationals of loss of power and decision-making to

inpatriate managers. It is critical to reduce tension

between the home-country managers and the

inpatriate managers;

(3) I

ntegration—some remaining conflict over adap-

tation to the home-country organization culture

and dominant cultural norms resulting in a

growing recognition of the value of diverse

perspectives. Barriers to successful completion

of this stage are the balance between the two

cultures (e.g., home-country and inpatriate man-

ager), the blurring of norms and acceptance of the

‘hybrid’ culture by both groups. The critical

juncture being a blending of organizational

culture acceptable to both groups; and

(4) I

ndividualism—home-country organization

acceptance or difference in frame-of-reference

of inpatriate managers and valuing their input to

the strategic direction of the organization. The

value of tacit knowledge of the inpatriate

managers is acknowledged and their input to

strategic thrust is support by the home-country

managers. The barrier to accomplishing this stage

in the process is maintaining a coherent cultural

historical perspective or frame-of-reference to

demonstrate the impact/value of inpatriate man-

agers to the globalization of the organization. The

critical juncture in this stage of the process is the

inclusion of inpatriate managers into formal/

informal networks in the organization.

Training the home-country nationals to be more

receptive to the inclusion of foreign nationals may be

as difficult learning process as having the inpatriate

managers understand the level/type of adjustment they

will need to make to be successful in the transition to

the home-country organization.

6.5. Development of support package for

expatriate/family

Every inpatriate manager that is going to enter the

home-country organization will require a formal as

well as informal support of those in the organization.

The human resource management task is to develop a

flexible support mechanism that can be adjusted and/

or be customized to the incoming inpatriate managers

(Harvey, 1985, 1997). The importance of this support

infrastructure can measured in the length of time that

it takes the inpatriate manager to adjust to the

organizational as well as general societal culture

shock that each will experience upon relocating

(Black et al., 1991). The support should encompass

external support for the family and the manager, as

well as internal support system or infrastructure for

the manager. The formal support mechanism should

be augmented by encouraging an informal recogni-

M. Harvey et al. / Journal of World Business 40 (2005) 267–280278

tion by home-country managers that the inpatriate

managers will need to be included in social activities

and informal organizational events (Harvey, 1985,

1997).

6.6. Monitoring/auditing of the ‘Liability of

foreignness’ processes and program

Once in place, the program for assisting inpatriate

managers to adjust to the local domestic macro and

organizational environments will need to be assessed

on a regular, timely basis. The success of this support

program for inpatriate managers may provide the

margin for global success of the organization by

helping to integrate this specific knowledge and

insights into the global organization better than its

competitors could do. Therefore, the functioning of

the process must be evaluated in terms of success, as

benchmarked against other such programs established

in the marketplace.

7. Conclusion

The inflow of inpatriate managers to home-country

organizations will continue to grow with the need for

accumulation of heterogeneous assets of strategic

importance. The need for a variety of perspectives, as

well as for the experience in the emerging markets of

the future, will rest to a large degree on the insights of

inpatriate managers from these countries (Garten,

1996, 1997a,b). Given the specific importance of this

group of managers, it would seem reasonable that

additional attention will have to be given to improving

their transition to home county organization, as well as

to the process of their socialization with and

acceptance by the home-country managers.

The importance of successfully integrating of

inpatriate managers is paramount in developing an

effective global strategy. This source of competitive

advantage (i.e., diversity of knowledge and experience

in a management team) may be one of the more

important traits of management team in successful

organizations. Unless the inpatriate ‘liability of

foreignness’ issue is addressed, the development of

a global mindset will be more difficult and organiza-

tion will be less likely to be able to successfully

compete in the global marketplace.

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