Advantages and Disadvantages of Using Local and Expatriate Employees to Staff International Subsidiaries
Locals
Advantages• Lower labor costs• Demonstrates trust in local
citizenry• Increases acceptance of the
company by the local community• Leads to recognition of the
company as a legitimate participant in the local economy
• Effectively represents local considerations and constraints in the decision-making process
Disadvantages• Makes it difficult to balance local
demands and global priorities• Leads to postponement of
difficult local decisions (such as layoffs) until they are unavoidable, when they are more difficult, costly, and painful than they would have been if implemented earlier
• May make it difficult to recruit qualified personnel
• May reduce the amount of control exercised by headquarters
Advantages and Disadvantages of Using Local and Expatriate Employees to Staff International Subsidiaries (cont.)
ExpatriatesAdvantages• Cultural similarity with parent
company ensures transfer of business/management practices
• Permits closer control and coordination of international subsidiaries
• Gives employees a multinational orientation through experience at parent company
• Establishes a pool of internationally experienced executives
• Local talent may not yet be able to deliver as much value as expatriates can
Disadvantages• Creates problems of adaptability
to foreign environment and culture
• Increases the “foreignness” of the subsidiary
• May involve high transfer, salary, and other costs
• May result in personal and family problems
• Has disincentive effect on local-management morale and motivation
• May be subject to local government restrictions
Why International Assignments end in Failure• Career Blockage
– Many feel that the home office has forgotten them and that their career has been sidetracked
• Culture Shock– Many people who take international assignments cannot adjust to a different cultural
environment
• Lack of Predeparture Cross-Cultural Training– Only about one-third of MNCs provide any cross-cultural training to expatriates
• Overemphasis on Technical Qualifications– The same traits that led to success at home can be disastrous in another country
• Getting Rid of a Troublesome Employee– International assignments may seem to be a convenient way of dealing with mangers who
are having problems in the home office
• Family Problems– The inability or unwillingness of the expatriate’s spouse and children to adapt to life in
another country is one of the most important reasons for failure
Difficulties on Return
• Lack of Respect for Acquired Skills– International experience is not highly valued
• Loss of Status– Returning expatriates often experience a substantial loss of
prestige, poser, independence, and authority
• Poor Planning for Return Position– Often management repatriates an employee with no idea of what
position this person should hold in the home office
• Reverse Culture Shock– Expatriates are usually unaware of how much psychological
change they have undergone until they return home
Selecting Employees for International Assignments
• Emphasize cultural sensitivity as a selection criteria
• Establish a selection board of expatriates• Require previous international experience• Explore the possibility of hiring foreign-born
employees who can serve as “expatriates” at a future date
• Screen candidates’ spouses and families
Hofstede Cultural Framework
1. Power Distance
2. Individualism vs. Collectivism
3. Masculinity vs. Femininity
4. Uncertainty Avoidance
5. Long Term Orientation
Power Distance
• “...the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.”
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PD
Power Distance at Work
• Hierarchy• Centralization• Salary range• Participation• Ideal Boss• Privilege & status
symbols
Individualism vs. Collectivism
• Individualist societies: ties are loose and everyone looks out for himself or herself
• Collectivist societies: people integrated into strong, cohesive groups; protection is exchanged for loyalty
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ID
Individualism / Collectivism at Work
• Employee-employer relationship
• Hiring and promotion decisions
• Managerial focus• Task vs. relationship
priority
Masculinity vs. Femininity
• Masculine societies: social gender roles are distinct (men focus on material success; women on quality of life)
• Feminine societies: social gender roles overlap (both quality of life)
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MA
Masculinity / Femininity at Work
• Centrality of work• Ways of managing &
decision making• Fem: equality,
solidarity, quality of work life
• Mas: equity, compete, performance
• Conflict resolution
Uncertainty Avoidance
• “…the extent to which the members of a culture feel threatened by uncertain or unknown situations.”
• NOT the same as risk avoidance
• Presence of rules
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100
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UA
Uncertainty Avoidance at Work
• Necessity of rules• Time orientation• Precision &
punctuality• Interpretation of
“What is different…”• Appropriateness of
emotional displays
Long term orientation Confucian Dynamism
• The ‘newest’ dimension
• three universal dimensions and two fourth dimensions
• Truth vs. Virtue: What one believes vs. What one does
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120
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LT
Confucian Dynamism
• Short-term orientation• Social pressure to
‘keep up with the Joneses’
• small savings• expect quick results• concern with
possessing Truth
• Long-term orientation• Thrift: being sparing
with resources• large savings• perseverance toward
slow results• concern with
respecting the demands of Virtue
Hofstede Framework Comparisons
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140
PD ID MA UA LT
U.S.A.
Canada
Japan
Netherlands
P.R.C