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The Management of Expatriates: Messages from Europe? Hugh Scullion

Chris Brewster

Much of our knowledge of expatriation and the processes of managing expatriates comes from North American researchers analysing the policies and practices of North American multinational corporations. This article uses that base of understanding, but argues that there has been an increasing stream of research into IHRM in Europe, which remains largely “invisible” to the North American specialists. Given the paucity of research in the area in general and the need for a more international understanding which can arise from examining different contexts, the article suggests that commentators outside Europe may find useful insights in the European analyses.

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uropean based multinational enterprises (MNEs) have increased in number and significance in recent years, linked with the rapid growth of internationalization and global competition. This reflects the growing importance of international economic activity in general which has resulted in the increased mobility of human resources. There is growing recognition that the success of global business depends, to a considerable degree, on the quality of a multinational’s human resources and on how effectively these critical resources are managed and developed (Stroh & CaliHugh Scullion, Strathclyde Business School, University of Strathclyde, Glasgow, Scotland. Tel: 440141-548-3999; Fax: 1-0141-552-3581. Chris Brewster, South Bank University, U.K. [email protected].

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giuri, 1998), and that the quality of management, in particular, seems to be a critical success factor (Black et al., 1999). The substantial increase in the number of international organisations has occurred at a time when these organizations are under increasing competitive cost pressures. In such circumstances, it is not surprising that MNE’s expatriation policies and practices are coming under closer scrutiny. Much of the research knowledge on the management of expatriates currently available in the international literature is drawn from research focused on North American MNEs. It has been argued that, because of the different research traditions and the limitations of the U.S. databases on which computer-literate

researchers rely, North American academics often overlook research which is not reported in U.S. journals (Brewster, 1999): an ironic result in this international research arena. This paper highlights the recent growth of research into expatriation in Europe and argues that this research deserves to be made more widely available to North American academics and managers1. The task is approached in the following way. First, we discuss the rapid growth of expatriate research in Europe over recent years. Second, some of the recent European research into the traditional “expatriate cycle” (selection, preparation, transfer, adjustment, monitoring, and repatriation) is examined. We cannot cover it all and have restricted ourselves, generally, to that which has been published in English: and even there we have had to be selective2. Third, some of the latest developments in European expatriate research which go beyond the issues involved in the traditional topics are explored. The majority of the work on the management of expatriates has been North American. The hegemony of the U.S.A. in the academic context is understandable given the extensive influence of the U.S. academic tradition in defining the nature of research in general and human resource management (HRM) research in particular (Brewster, 1999). Indeed some leading North American writers argue that ethnocentrism is inherent in U.S. based organizational theory and management education (Boyacigiller & Adler, 1991). In the field of expatriate HRM, North American researchers have made an outstanding contribution to the development of research on the

management of expatriates and have “set the agenda” through exercising a defining influence on research and theory in this field. It has been argued (Brewster, 1999) that many Americanbased organization theories appear implicitly to assume universality, despite a large body of research substantiating the cultural diversity of values and the impact of such diversity on organizational behavior (Hofstede, 1980; Laurent, 1981; Lane, DiStefano, & Maznevski, 1997). So, we argue that bringing the European research on expatriation to the attention of U.S. academics and managers is worthwhile for several reasons. First, national history has affected the general order of entry into international markets (Yip, 1997) and European MNEs were the first to internationalize. Because of the small size of their domestic markets, European companies tend to have a high percentage of revenues being international and also have a longer history of moving managers around the world (Hamill, 1989). This is in contrast to U.S. MNEs which, typically, have huge domestic markets and tend to underadapt for local markets (Yip, 1997). Based on an index of “transnationality” (which is an average of ratios of foreign assets to total assets, foreign sales to total sales and foreign employment to total employment) a report of the United Nations Conference on Trade and Development on foreign direct investment (cited in the Economist, September 27, 1997) listed eight of the world’s top ten MNEs as European, with only one U.S. MNE is in the top 15 listed. This reflects the importance of the size of the domestic market for U.S. The Management of Expatriates

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firms (Dowling et al., 1999: 18 –19). Second, many European MNEs typically built up overseas subsidiaries that enjoyed a large degree of autonomy. This subsequently limited their ability to switch from the direction of local autonomy towards global integration (see e.g., Philips problems in formulating and implementing globally integrated strategies due to problems with its highly independent subsidiaries, Jeelof, 1989). Third, various studies have found differences in organization structure and management processes between American, European, and Japanese companies (Franko, 1971; Egelhoff, 1984). Bartlett and Ghoshal (1989) argue that American MNEs stress formalization of structure and process while European MNEs place greater importance on socialization. Fourth, there is some evidence from the examination of expatriate “failure rates” that European organizations are more successful than North American firms at managing the process of expatriation (Tung, 1984; Brewster, 1991; Suutari & Brewster, 1999; Harzing, 1999; and see below) and that many Europeans are better prepared for their role as expatriates (Harris & Brewster, 1999b). In the past decade there has been a rapid growth of interest in expatriate HRM in Europe and new fields in this area have been opened up by European researchers (see Brewster & Scullion, 1997; Festing, 1996; Brewster & Harris, 1999). Indeed, there has been a surge in the number of conferences, articles, journals, and books devoted to the extensive research being undertaken in Europe into the management of expatri348 Journal of World Business / 36(4) / 346 –365

ates (Brewster & Harris, 1999; Harzing, 1999).

THE EUROPEAN CONTEXT The European research reveals similarities and differences between Europe and North America. Europe is very heterogeneous (Weinshall, 1977; Hofstede, 1980) and there are important cultural differences between European countries. However, although Europe is not a monolith (Harzing, 1999), despite the approach of some researchers, there are still some important factors that make research in Europe as such significant. We identify eight. First, there is the development of the European Union (EU), which involved the dismantling of barriers to the movement of goods, capital and labor within Europe. This has led to a rapid increase in cross-border trade and higher levels of intra-European foreign direct investment that has intensified the trend toward regional integration. For all the major European countries (apart from the U.K.) more than half their Foreign Direct Investment (FDI) outflows are to other European countries (Dicken, 1998). One direct impact of membership of the EU is that the substantial legal and administrative requirements for foreign workers do not apply to transfers between EU countries. This represents a significant difference between the European and other international free-trade areas and has led to a strong growth of expatriation between European countries and significant changes in the forms of expatriation, which will be discussed below.

Second, research suggests there is a growing emphasis on regionalization as the route to globalisation for many MNEs (Morrison, Roth, & Ricks, 1991). Many international organizations increasingly treat the European market as a single entity and seek to integrate production, marketing, and human resource strategies at the European regional level. A good example of this is Ford Europe who move expatriate managers freely around their European operations, with much more restricted mobility between Europe and corporate headquarters in the U.S. (Dowling et al., 1999). Third, there has been a rapid growth in the numbers of smaller and medium sized enterprises (SMEs) who have internationalized their operations in recent years (U.N., 1993). Such growth into other countries is significantly easier in the EU. Recent research suggests that theories of internationalization that have been developed from research in larger MNEs do not adequately explain the approaches used in smaller firms (Scullion, 1999b; Monks & Scullion, 2001). At the other end of the scale, the Single European Market facilitated a rapid growth in the number of large cross-border mergers and acquisitions that increasingly became the most important foreign market entry strategy for many larger European companies in the late 1980s and 1990s. In particular, this was a significant departure for French and German MNEs who previously favored organic growth as a means to internationalization. This raised significant problems of post merger management and control and highlighted the importance of cultural differences fac-

ing expatriates transferred between European countries (Hamill, 1992; Morosini, 1997). Fourth, Europe has more densely populated, highly industrialized countries in a smaller geographical area than anywhere else in the world. Many European citizens can travel to three or four countries in only a few hours’ driving time. Most European locations are within one or two hours’ flying time. In human resource management terms the geographic situation gives international organizations locating their operations in Europe a number of interesting extra options: alternatives to expatriation are more common in Europe and practices such as Euro-commuting and frequent flying, are becoming more popular in Europe (Forster, 2000; Petrovic et al., 2000). Fifth, expatriation in Europe may not involve sending people “overseas”. Terminology is important here. In the European context, “overseas” is inaccurate. Most Europeans could find themselves working in several dozen different countries without crossing any sea. The metaphor “overseas” implies more than a geographical feature. It points to the conviction that an overseas assignment is connected with a degree of exoticism and strangeness, in such areas as culture, history, religion, natural environment/climate, food, etc. (Mayrhofer & Brewster, 1996). For transfers between European countries this may not be the case and there may be many similarities and familiarities as well as more subtle cultural differences experienced by expatriates. European research has taken the lead in exploring the problems of managing expatriates The Management of Expatriates

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when the transfer is to nearby or similar countries. For example, a recent study examining Finnish expatriates moving to other European countries suggested that expatriate transfers can be difficult between nearby countries as well as between those a hemisphere apart (Suutari & Brewster, 1999). This is also consistent with the findings of Tung (1998), one of the North American researchers who has consistently explored other parts of the world, who found no significant relationship between cultural distance and difference in the level of economic development on the one hand, and expatriate success on the other. Given the rapid growth of intraEuropean trade following the advent of the EU, European research is more likely to examine international transfers between developed countries and be concerned with the effects of expatriation on the local organization (Suutari & Brewster, 1999). Sixth, since the collapse of Communism in the central and eastern European (CEE) states, there was a significant growth of FDI in these transitional economies with a tenfold increase in FDI between 1990 and 1995 (UNCTAD, 1996). Much of this increase reflected a significant eastward flow of western European business activity. Managers, sales representatives, technical specialists and governmental and international aid agency officers flooded into these emerging “transitional economies”, newly seeking to participate in the international market economy. The transition economies of the CEE provide a fascinating test-bed for ideas about the management of expatriates, many of whom were employed, 350 Journal of World Business / 36(4) / 346 –365

not by wholly owned subsidiaries of the parent companies, but by international joint ventures or some other form of international alliance (Lyles & Baird, 1994; Child & Czegledy, 1996). Seventh, the development of the EU and its civil service and its many agencies, the higher levels of public sector employment, the traditional international links (e.g., the British Commonwealth), and the location of many international agency headquarters in Europe, in Geneva, Lyon, Paris, Brussels, or Vienna, combine to mean that “not-forprofit” international organisations are more common in Europe. Hence, in Europe, there is more interest in noncommercial international organizations (Hailey, 1999). Finally, while the European nations are diverse in character, a number of dominant traits can be identified which affect European-based MNEs. There is greater collectivism found in Europe compared to the U.S.A.: and European firms are more experienced at working with trade unions and other stakeholders than U.S. firms (Brewster, 1995). It has also been argued that “groupism” in Europe, once limited to pride of nationality, has evolved to include a sense of European citizenship (Parker, 1998). Further, there are stronger links between business and government compared with the U.S.A., which partly reflects the greater expectation in Europe for government intervention to balance the private interests of citizens with the interests of business organizations (Hampden-Turner & Trompenaars, 1993). These factors, separately or in combination, have led not just to substantial

increases in the amount of crossnational activity; but also to major increases in the amount of expatriation and the emergence of new forms of expatriation. Reflecting the scale and the nature of the changes outlined above, there has been a concomitant growth in the amount of research into expatriation in Europe. This now goes beyond merely replicating the work conducted in North America in new sites, addresses new subjects and provides new conceptual insights into the topic in the European context (Scullion & Brewster, 1997).

THE CHANGING NATURE OF EXPATRIATION IN EUROPE Expatriation in Europe is changing in some crucial ways. Some of these are common to other regions of the world and some are unique; but taken together they are leading to new challenges for the management of expatriation and creating a new research agenda. There are significant changes in the international environment; in the international organizations; and in the expatriates themselves. Changes in the International Environment in Europe The environment for expatriation has changed dramatically in Europe, because of the development of the Single European Market. But other factors have also been important: the collapse of the Communist regimes in central and Eastern Europe, better travel connections within Europe and, in addition, an increasing international orientation

among new entrants to the European workforce, stimulated in part by foreign family holidays and European student exchange programmes. There have been changes in the location of expatriate assignments for European MNEs. The proportion of expatriates going from Europe to developing countries has reduced, in part because of growing pressure by foreign governments on MNEs to provide jobs and training for local employees (Hailey, 1999). However, there has been a growth in expatriation between developed countries in Europe and elsewhere (Brewster & Scullion, 1997) reflecting the trend of the global Triad (Europe, U.S. Japan) to dominate world trade and direct investment. Changes in International Organizations In the European Union, much of the growth in expatriation is taking place in two types of organization. First, in formerly publicly owned companies in East and Western Europe that have recently been “privatized”, and are now able to compete internationally. In the second category, there are increasing numbers of small and medium-sized enterprises (SMEs) which are beginning to treat Europe, rather than just their own country within Europe, as their local market. In both cases the experience of internationalization is limited. Research in these areas is in its infancy (Mulhern, 1995). Preliminary European evidence suggests that models of expatriate HRM developed for giant multinationals may not be appropriate for The Management of Expatriates

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international SME organizations (Scullion, 1999). Amongst the larger and more established international players there have been significant changes too: a much more competitive environment (D’Aveni, 1995) forcing an increasing attention to cost reduction and cost-effectiveness. Because expatriates are amongst the most expensive people any organisation employs, and the measurement of expatriate performance is, to say the least, uncertain, this has had a direct effect on the way organizations view their expatriates. This has been made more problematic by the reorganization of MNEs in Europe and the consequent reduction in the size of headquarters (Scullion & Starkey, 2000). The strong trends towards decentralization and downsizing over the last decade notwithstanding, recent empirical evidence shows that many MNEs have not lost the central expertise in the management of expatriates that has been built up over many years (Scullion & Starkey, 2000). The relationship between the management of expatriates and the role of the corporate human resource function in the international firm has been neglected. New approaches are required that link developments in the management of expatriation with the broader international strategy. In noncommercial organizations expatriation has also grown (Brewster & Harris, 1999), particularly in international governmental and “nongovernmental” organizations (NGOs), and in international aid organizations and international charities. Yet there has been almost no research into the management of expatriation in these noncommercial organizations. A newly developing 352 Journal of World Business / 36(4) / 346 –365

theme of research, however, suggests that the experience of major multilateral agencies such as the United Nations, or leading international NGOs such as the Red Cross, can also shed valuable light on the internationalization process. In particular the research has raised questions as to whether the continued use of expatriates is both cost effective and appropriate and suggests that MNEs and international development agencies need to invest more in developing their local staff (Hailey, 1999). One effect of these changes is to challenge the ready acceptance of expatriation as the answer to international staffing issues: research in Europe is beginning to consider international staffing questions in a more strategic context. An instructive case study of a Spanish clothing company has shown how a company can operate internationally without having any expatriates (Bonache & Cervino, 1997). Further research is required to determine whether these staffing practices are industry specific or not. The 1990s have been characterized by a rapid spread of new forms of collaborative international business activity and there is growing evidence that the effective management of expatriates is a critical factor determining the success or failure of these arrangements (Cyr & Schneider, 1996). In Europe, there is a particular concern over the supply of managerial skills and competences needed to deal with the complex HRM issues and problems associated with the growth of international joint ventures and alliances (Bournois, 1992). For example, studies of IJVs in the CEE states suggest that sharing

management and control has been problematic in many cases. The evidence suggests that learning in IJVs is hindered by a lack of trust in local management and a failure to delegate decisions. Currently one key challenge for managers of western IJVs and local subsidiaries in the context of the rapidly changing environmental and sociocultural context of CEE is to manage organizations in a way which recognises and uses the strengths of both locals and foreigners (Cyr & Schneider, 1996). Changes in the Expatriates Themselves The number of female expatriates is low in relation to the overall size of the qualified labor pool (Adler, 1986; Harris, 1995, 1999; Linehan & Scullion, 2001b), despite the evidence that women may be well suited to the needs of international management because of their cross-cultural communication skills (Tung, 1995; Jelinek & Adler, 1988; Mayrhofer & Scullion, 2002). However, there appears to be a steady increase in the use of women in international assignments (Tung, 1998) and that the number of women expatriates may be particularly high in some Nordic MNEs (Suutari & Brewster, 1999). However, the reality of the “informal” mechanisms through which most expatriates are selected is likely to continue to reinforce prejudices in many organizations (Harris, 1999). Recent research has identified the lack of networking facilities and mentoring as further informal barriers for women in international

management (Caligiuri et al., 1999; Linehan & Scullion, 2001c). The traditional lifelong “career expatriate” appointment may be in decline (Brewster & Scullion, 1997; Forster, 2000), but there are clearly still relatively large numbers of them employed by European based MNCs (Suutari & Brewster, 2001; Petrovic et al., 2000). Expatriates are more likely now to do single assignments: occasionally undertaking a second assignment later in their career. More of them are better educated with degrees or MBAs. As a result of these factors, the psychological contract with expatriates is changing (Welch, 1998).

RESEARCH FINDINGS EXPATRIATE CYCLE

IN

EUROPE: THE

The study of expatriation has, in general, followed the traditional expatriate “cycle”, with early attention on the earlier stages of the assignment and a successively developing focus on the later and more complex issues of adjustment, monitoring performance, and repatriation. The focus of this paper is on some newer developments in expatriate research in Europe but here we summarize the contribution of this research in each area of the cycle. The empirical research on trends in international staffing policies and practices reveals some differences between European and U.S. firms (Tung, 1981, 1982, 1987). The majority of European firms rely heavily on expatriates to run and control overseas operations (Mayrhofer & Brewster, 1996; Scullion, 1994) and they usually have longer asThe Management of Expatriates

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signments (Brewster, 1991). There is now pressure for U.S. companies to reduce the length of their assignments even further (Black et al., 1999). Researchers have argued that the basic assumptions connected with international staffing in U.S. MNEs only apply partly to Europe and suggest caution regarding an uncritical and unmodified adaptation of concepts derived in the North American context (Mayrhofer & Brewster, 1996). Much of the early research on international staffing was largely descriptive, prescriptive, and lacking in analytical rigor (Dowling et al., 1999). One European critique (Brewster & Scullion, 1997) argued that staffing policies are often developed in isolation from other areas of expatriation policy and fail to connect expatriate selection to the company’s international business strategy. Researchers are finding more variety in approaches to staffing and other IHRM activities (Scullion & Starkey, 2000; Petrovic et al., 2000). Drawing on the theoretical notions of the resource based view, European researchers have attempted to explain the strategic dimension of expatriate selection. Bonache and Fernandez (1999) clarified the linkage between expatriates and competitive advantage by highlighting the importance of the transfer of tacit knowledge to new markets, through transferring teams rather than just individual managers and Bonache and Brewster (2001) explored the role of expatriates as mechanisms of knowledge transfer. Recent European research highlights the importance of country specific factors and highlights differences between 354 Journal of World Business / 36(4) / 346 –365

countries in international staffing practices. Harzing’s (1999) study shows Japan and Germany at one extreme with a high level of expatriate presence while the U.S.A. and the U.K. were at the opposite extreme. Research indicates a higher level of parent country nationals when cultural distance is higher (Boyacigiller, 1990) and that subsidiaries in Asian and Latin American countries employed the largest percentage of PCNs, with subsidiaries in Europe and the U.S.A. employing fewer (Tung, 1981, 1882). The latest European research has combined country of location of the subsidiary and headquarters, and industrial sector, finding that the strongest and most direct type of expatriate control occurs when all three factors work in the same direction. For example, direct expatriate control is particularly strong in the Far Eastern or Latin American subsidiaries of Japanese and German operating in the automobile or electronic industries, and much less important in the subsidiaries of U.S., French, and British MNEs located in Scandinavian or Anglo-Saxon countries and operating in the food or paper industries (Harzing, 1999). Not all cross-border business activities are staffed by “traditional” expatriates, that is, expatriates on international assignments lasting several years. There are a significant number, in Europe at least, of self-initiated expatriate experiences (SFEs): people who find their own way to another country (Suutari & Brewster, 2000). Purchasing and sales activities are often conducted by people on short (often, literally, flying) visits. The improvement of travel and technology is making such nonexpatriate ar-

rangements more common. In Europe, there are many executives travelling internationally for perhaps 100 to 200 working days in a year. Much of Eastern Europe has been opened up by executives “Eurocommuting”; travelling to, say, Slovakia or Hungary on Monday morning and returning to Stuttgart or Vienna on Thursday evening or Friday morning (Petrovic et al., 2000). Consultancies specialize in “interim” managers—sent to a newly purchased foreign acquisition or to establish a presence for a company in a new country; but only expected to stay three or four months (Mayrhofer & Brewster, 1996). At the other end of the scale, the increasing use of video conferencing and real-time computer information from around the world has provided alternatives to control by the physical presence of an expatriate (Martinez & Jarrillo, 1991). The implications of these developments for the management of expatriates remain largely unresearched, but they may have considerable implications for MNEs. Research into the selection of expatriates has generally been focused on the more “visible” aspects of these issues such as the criteria used in selection decisions. Like some U.S. researchers the Europeans find that in practice technical expertise and domestic track record are by far the dominant selection criteria. Factors such as language skills and international adaptability, which are less significant in most U.S. studies, seem to have more importance for European organizations (Tung, 1982; Suutari & Brewster, 1999). Research in Europe, however, also indicates that selection criteria are

largely constructs of the international HR department: in practice decisions on expatriate selection are usually taken by line managers—who often simply ignore the selection criteria espoused by the HR department (Harris & Brewster, 1999a). The evidence on numbers of expatriates is mixed. There are indications that the availability of people willing to accept global assignments is not increasing fast enough to meet the rapidly growing demand for international managers (Caligiuri & Cascio, 1998; Stroh & Caligiuri, 1998; Scullion & Brewster, 1998). Research suggests that general shortages of expatriate managers are particularly acute in European MNCs and constrain corporate efforts to expand abroad, and that the successful implementation of global strategies may be constrained by an inadequate supply of international managers (Scullion, 2001). However, other surveys find the number being sent on international assignments is increasing steadily and will increase further in the future (Petrovic et al., 2000). Poor expatriate selection is linked to expatriate failure, which is usually defined as the premature return of an expatriate manager (Tung, 1981). The literature suggests that expatriate failure remains a significant problem, particularly for U.S. MNEs (Tung, 1981, 1982, 1984). More recent European research confirms Tung’s European results and suggests that expatriate failure may be a less significant issue for European MNEs (Brewster, 1991; Scullion, 1994; Price Waterhouse, 1997-98; Suutari & Brewster, 1999) Four main reasons have been advanced to explain the hisThe Management of Expatriates

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torically lower European expatriate failure rate. First, European companies had more effective expatriate HRM policies covering international transfers reflecting their longer experience of international operations (Brewster & Scullion, 1997). Second, European companies paid closer attention to the selection of expatriates, reflecting the greater importance of international revenues for European MNEs relative to U.S. MNEs (Scullion, 2001). Third, international experience was more highly valued in European MNEs, and expatriate assignments were regarded as high status and often integral to the overall management development process (Bjorkman & Gertsen, 1990). Finally, European managers were perceived as more international in their orientation than U.S. managers (Hamill, 1989), though Tung (1998) argues that “American expatriates appeared to have improved significantly their intercultural skills over time” (Tung, 1998: 140). However, these findings on expatriate failure should be treated with caution in the light of Harzing’s (1995) findings that the persistent myth of high expatriate failure rates seems to have been created by successive misquotation of three articles. She highlights the lack of empirical data on U.S. MNEs over the past decade and a half, but suggests that the overall picture indicates that expatriate failure is higher in U.S. MNEs. Training and development programs for expatriates appear to be more common in European than in U.S. MNEs (Tung, 1982; Hendry, 1994). Comparative studies of MNE training practices found that U.S. MNEs tend to use predeparture training programs much less 356 Journal of World Business / 36(4) / 346 –365

frequently than European and Japanese firms (Tung, 1982, Brewster, 1991). Over 60% of British and Irish MNEs provided some predeparture training for expatriate assignments (Scullion, 1994) whereas U.S. research suggests that only some 30% of U.S. managers destined for international assignments receive cross-cultural training (Black, 1998; Black & Mendenhall, 1990): primarily because top management generally does not believe the training is necessary or effective. Black et al. (1999) estimated that more than half of U.S. companies operating abroad provided no form of predeparture preparation. In the light of the shortages of international managers facing European companies, there was growing interest in European MNEs in developing effective international management education and training programs (Scullion, 2001). Research (Price Waterhouse, 1997-98) showed that cultural awareness training is the most common form of predeparture training for expatriates in Europe, but that it continues to be offered more on a voluntary than a compulsory basis. Only 13% of the firms surveyed said they always provided their expatriates with cultural training, though almost 50% provided cultural briefings for “difficult” assignments. The European evidence suggests that other forms of preparation— briefings, shadowing, look-see visits — are more frequent than formal training programs and may be more cost-effective (Brewster & Scullion, 1997). A recent trend is that European MNEs are extending their predeparture training programs to include the spouse/partner and children, reflecting the growing awareness of the

link between expatriate performance and family adjustment (Linehan & Scullion, 2001c). Several influential models of training and development for expatriate managers have been developed by U.S. academics, including contingency models which consider the task, the individual and the environment before deciding the depth of training required (Tung, 1981; Mendenhall & Oddou, 1986; Mendenhall, Dunbar, & Oddou, 1990). More recently, European researchers have attempted to develop integrated frameworks for predeparture training that will allow organizations to tailor programs to the needs of the individual expatriate, taking account both job and individual variables, as well as an assessment of existing levels of competence (Harris & Brewster, 1999b). A more tailored approach to expatriate training could become more important in the future, given that expatriate training needs are changing rapidly (Brewster & Scullion, 1997; Forster, 2000). Other European researchers have questioned why companies often assume that cross-cultural training should take place only before the international transfer; highlighting the need for training and development throughout the assignment (Baumgarten, 1997). The evidence suggests that, in practice, expatriate training programme and design is still largely conducted informally, with little regard to findings in the research literature (Black et al., 1999). Finally here it is argued that the development of international managers in the future will involve more frequent cross-border job swaps, short assignments, or assignments to multi-cultural

project teams (Forster, 2000; Scullion, 2001). Issues of expatriate adjustment have also been studied in the different context of expatriation in Europe. The opening of the CEE markets has greatly increased business interaction between Eastern and Western Europe. However, research suggests that CEE markets, partly because of the unstable business environment, may have several characteristics that prove difficult for western expatriates (Villinger, 1996). The importance of cultural sensitivity in Eastern and Central Europe has been highlighted in several studies (e.g., Cyr & Schneider, 1996). In addition, the evidence suggests that local managers in these countries often resent the attitude of western managers frequently seen as arrogant and unwilling to take account of the views of local people (Soulsby & Clark, 1996; Yan & Gray, 1994; Cyr, 1997). Morley et al., 1997 address the extent to which frameworks of international adjustment, developed primarily in the North American context, are applicable to the transition economies of the ex-Communist states of Central and Eastern Europe (CEE). Although the findings supported most of the previous research on adjustment, it was found that aspects of cultural novelty, previous international experience and role discretion did not seem relevant to Irish expatriates in Moscow. A detailed understanding of the context of adjustment in each case is therefore seen to be important in determining which variables are most likely to cause problems. Waxin (2001) found empirical evidence that managers from different countries The Management of Expatriates

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adjust at different rates and in different ways. The question of performance management of expatriates involves a complex range of issues. Research in North America suggests that rigorous performance appraisal systems for expatriates are far from universal (Schuler et al., 1991). This is perhaps surprising given the high costs of expatriate underperformance and the growing tendency to see expatriates as key human assets (Adler & Bartholomew, 1992). It appears that European firms are more likely to pay close attention to this aspect of expatriation and tend to evaluate managers more on the achievement of long term goals rather than the short term measures used by the U.S. companies (Lindholm et al., 1999). In part this reflects the growing use of international assignments for developmental purposes in European MNEs and the greater integration of expatriation into the overall career development process in European firms (Scullion, 2001). However, there are considerable differences in the way the appraisal process is handled in different countries. Tahvanainen (1998) found that in Sweden and Germany, for example, it is normal for staff to participate in the setting of job goals, whereas in the U.S.A. setting job goals is the priority of senior managers. The repatriation of expatriates has been identified as a major problem (Harvey, 1989; Peltonen, 1997; Scullion, 2001), yet early studies into the issue of repatriation indicated that it was somewhat neglected by multinationals (Mendenhall et al., 1987). North American academics have made a ma358 Journal of World Business / 36(4) / 346 –365

jor contribution to our understanding of repatriate adjustment (e.g., Adler, 1986; Black & Gregerson; 1992, Harvey; 1989; Tung, 1998). Concern over reentry was cited as a significant reason affecting expatriate performance in European MNEs (Forster, 2000). For many European MNEs this problem has become more acute in recent years because expansion of foreign operations has often taken place at the same time as rationalization of domestic operations: there are fewer unfilled positions available to returning expatriates in most companies. The problems associated with re-entry into the domestic organization include loss of status, loss of autonomy, loss of career direction, loss of income and, in addition, a feeling that their international experience is undervalued by the company (Scullion, 1994; Peltonen, 1997; Linehan & Scullion, 2001). This does not fit with the objective of most MNEs of developing a culture capable of balancing local responsiveness with global integration (Kamoche, 1997). Many expatriates leave their company on return (Adler, 1986; Suutari & Brewster, 2001a) with the consequent loss of investment and expertise. Yet, although it is widely accepted that the costs of expatriate turnover are considerable, very few firms have effective repatriation programmes (Forster, 2000; Scullion, 2001), though, career mentoring systems are more common in Europe (Conference Board, 1997; Price Waterhouse, 1998; Peltonen, 1999). There appear to be differences between U.S. and U.K. MNEs and those based in other European countries with respect to their policies regarding a

guarantee of a re-entry position. A Conference Board survey (1997) showed that 74% of continental European companies provided written guarantees of a return position, compared with 50% of U.K. companies and 38% of the U.S. companies in the sample. Job guarantees are reducing generally—from 70% of companies in the 1995 survey to 46% in 1998 (Price Waterhouse, 1998). Suutari and Brewster (2001) found that amongst Finnish expatriates surveyed in 2000, 14% had already agreed a specific job on repatriation before the assignment started and 56% of them had guarantees that the company would arrange at least a similar level job on return. European research suggests that managing repatriation becomes more complex and problematic as decentralization increases in MNEs (Scullion & Starkey, 2000). A majority of U.S. managers were satisfied with expatriation, whilst most were unhappy with repatriation (Tung, 1998). In some European countries at least, repatriates thought their expatriate experience was valuable, but not necessarily in the company that had sent them out (Suutari & Brewster, 2001a). This loss of investment and international knowledge has led to calls for a more strategic approach to repatriation (Scullion, 2001).

CONCLUDING REMARKS Few scholars and managers would still regard expatriate HRM as a field still in its infancy. Not only has there been a growing awareness of the strategic importance of effectively managing international staff and a greater understand-

ing of the international dimensions of HRM (Dowling et al., 1999), there has also been some progress in developing theoretical models of expatriation (De Ceiri & Dowling, 1999; Brewster & Harris, 1999). While the vast majority of research in this area still concerns U.S. MNEs, this article reveals a growing body of empirical evidence in Europe, as there is elsewhere, which highlights the major expatriate HRM issues and challenges which firms face as they undergo the internationalization process. This is an important development as studies suggest there are major differences in the approach to the management of expatriates between U.S., Asian, and European firms (Tung, 1982; Harzing, 1999; Peterson et al., 1996; Dowling et al., 1999). There are still considerable differences between European countries regarding approaches to expatriate management. Yet, while much of the recent research is less descriptive and more analytical than earlier work in the field, it still has an operational and practical orientation (Kochan et al., 1992; Ferner, 1997). Studies which seek to integrate expatriate HRM with the international corporate strategy of the firm are relatively rare (Brewster & Scullion, 1997). Also difficult to find are empirical studies that examine the integration of the various expatriate HRM practices. Approaches which consider the lessons and outcomes for all stakeholders in the multinational enterprise (Kochan et al. 1992) would be particularly appropriate in European context, where firms are more used to working with trade unions and other stakeholders than their U.S. The Management of Expatriates

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counterparts (Ferner, 1997; Brewster, 1999). This article has sought to bring to the attention of North American academics and managers the growing stream of research into expatriation in Europe. The article has critically examined the changing circumstances of expatriation in Europe and argued that the more recent European based literature adds to our knowledge of expatriation by contributing to a deeper understanding of the importance of the context in which expatriation takes place. Our review of the European research on expatriation revealed similarities and differences between Europe and North America. It also confirmed that Europe is heteregeneous and that there are many cultural differences within European countries which impact on expatriation. A major conclusion was the importance of understanding the context within which expatriation occurs. Whilst our review does not reveal a separate research agenda for expatriation emanating from the European context it does highlight important areas for future research: including expatriation in SMEs and noncommercial organizations, expatriation to nearby countries, motivations for international mobility, international staffing, dual career couples, women in international management and repatriation. These issues are not specific to Europe but have particular resonance in the European context. In addition to highlighting the importance of understanding context, our review identifies some of the key contextual factors impacting on expatriation in Europe compared with North America. We highlight the growing importance of 360 Journal of World Business / 36(4) / 346 –365

regional international international strategies for expatriation in the European context and the particular challenges of the rapid growth of expatriation in central and eastern Europe. We also identify the emergence of some interesting alternatives to expatriation in Europe, such as Eurocommuting and frequent flying. These may be particularly suited to the European context, and we suggest that the future development of international managers in Europe context will increasingly involve more frequent cross-border job swaps, short assignments and assignments to international project teams. Our paper discusses the changing nature and pattern of expatriation in Europe and we suggest that new models of expatriation are needed as various factors such as resistance to international mobility, quality of life considerations, and dual career/family issues are pressuring traditional patterns of expatriation in Europe. We note the growth in importance of expatriation in SME international organizations and in not-forprofit international organizations in the European context. Our review also suggests that repatriation may have some distinctive features in the European context. European research shows that the management of repatriation is more problematic in decentralised MNEs and yields some insights into how the repatriation process can be used to develop the internationalization of organizations (Scullion & Starkey, 2000). The implications of the European research here for practitioners are indirect. Managers with experience of international operations will be aware of the general factors impacting on expatria-

tion that are only relatively recently being addressed in the European research. The argument of this paper is that, given the globalization of markets, there is a need for a more international understanding of expatriation through examining particular contexts in some depth, and we suggest that managers and academic specialists outside Europe may find useful insights in the European research.

NOTES 1.

2.

The authors are grateful for detailed comments and advice from earlier anonymous reviewers and, in particular, from the joint editors of this special edition. The nature of the task involves extensive citation of European research and we have seen the chance of allowing other academics the opportunity to track the texts as sufficiently important to justify an extensive reference list. Length considerations have meant that we have, therefore, had to be parsimonious with our citation of North American texts. We do not mean to ignore or to downplay this more familiar work: it is just that to pay it due attention here would have doubled or trebled the already long list of references.

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