Academic journal article Multinational Business Review

The Relationship between Foreign Transfers and U.S. Companies' International Strategies

Academic journal article Multinational Business Review

The Relationship between Foreign Transfers and U.S. Companies' International Strategies

Article excerpt

ABSTRACT:

This paper relates the different motives for transferring employees internationally to the conduct of each major international strategy (multidomestic, global, and transnational), proposes seven hypotheses on these relationships, presents and discusses the results of a survey of heads of human resources or international operations in United States based companies, and concludes with theoretical and practitioner implications of the study and suggestions for future research. We found significant support for three hypotheses and directional support for two others.

INTRODUCTION

An international company's overall strategy defines the relationship and ideal roles for each operating unit including headquarters. However, the efficacy of those roles depends not only on the logic of the strategy, but also on the internal and external constraints that affect the strategic implementation. The expected roles of each operating unit, in turn, determine the needed management qualifications and whether there are potential advantages to transferring personnel, especially managers, internationally. The importance of having the right manager in the right place in order to achieve operational objectives cannot be over-emphasized. Nevertheless, international transfers are costly even in the most ideal circumstances. If there are mismatches between international managers and corporate strategy, there are additional costs in terms of managerial and corporate performance. However, when there are perceived advantages from moving people internationally, internal and external constraints often limit the viability of the transfers, thus impeding the desired strategic implementation.

The purposes of this paper are to discuss the relative importance of different reasons for international transfers and to tie these reasons to types of international strategies. Understanding these relationships may improve the strategic fit between corporate strategy and international managerial assignments, thus improving managerial and corporate performance. Specifically, it will (1) develop hypotheses on the ranking of the importance of different motives for transferring personnel internationally, (2) explain how the conduct of each major international strategy (multidomestic, global, and transnational) necessitates different needs for and imposes different constraints on international transfers, (3) develop hypotheses on the relationship between operational strategies and international transfers, (4) present and discuss the results of a survey of heads of human resources or international operations in U.S. companies, and (5) conclude with the theoretical and practitioner implications of the study and suggestions for future research.

In essence, this paper raises and empirically tests two important questions that have not been previously tested. First, which of the three main rationales for using expatriates is considered the most important? second, is there a relationship between a firm's international strategy and the amount and type of expatriates it employs?

Before addressing the above points, it is useful to define how we use certain terms in this paper because the terms used to define foreign assignees have become quite diverse and inconsistent (Dowling and Welch 2004). Although the term expatriate is now sometimes used to refer only to nationals of the headquarters' country who are transferred abroad, we use the term to mean anyone transferred by a company to work outside his or her country of citizenship. Thus, in this study, expatriate is an all-encompassing term that includes several sub-categories. First, we use the term parent country nationals (PCNs) to refer to expatriates who are citizens of the country where corporate headquarters is located. second, we use the term third country nationals (TCNs) to refer to people who are neither citizens of the country where the corporation is headquartered, nor of the country where they are assigned. …

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