There are many reasons to deploy expatriates to a foreign subsidiary various (Miller 1989; Zentes/Swoboda/Morschett 2004, pp. 877-878; Dowling/Festing/
Engle 2013, pp. 116-117; Griffin/Pustay 2013, p. 541):
■ Supporting the subsidiary operations by filling a position with a competent candidate that might not be available among current host country staff.
■ Coordinating the MNC: Expatriates are often the linchpins between the HQ and the subsidiary. They help to implement the corporate strategy in the host country. They are a means of coordination by direct supervision and help to transfer the corporate culture from the HQ to the subsidiary and, upon their return, vice versa. Informal relations are established between the expatriate and host country employees.
■ Knowledge transfer: Expatriates are a knowledge transfer mechanism, particularly for tacit knowledge. They give knowledge that they have gained via personal experience in the HQ to their colleagues and subordinates in the foreign subsidiary. When returning to the home country, they transfer knowledge that they have gathered in the subsidiary back to the HQ.
■ Expatriate assignments can be an important incentive in the career path of executives. In this case expatriates are selected for management development and as a reward for high performance. The expatriate enhances his managerial skills, learns how to lead people from different cultural backgrounds, develops a tolerance for ambiguity and learns to accept different perspectives.
Phases in Expatriate Assignments
After the candidate has been selected for an international assignment and been send abroad, the expatriate has to adjust to the new environment to work effectively. Research has shown that cultural adjustment of expatriates to the host country typically proceeds through four different phases (see Figure 22.2) (Hofstede 2001; Dowling/Festing/Engle 2013, pp. 130-131):
Source: Adapted from Hofstede 2001, p. 259; Griffin/Pustay 2013, p. 547.
■ In the first stage, the honeymoon phase, the excitement of working in the new environment is high. The manager sees the new culture as exotic and stimulating and underestimates the challenges of adjusting. This stage usually lasts a few weeks or months.
■ In the second stage, many expatriates become disillusioned and the differences between the old and the new environment are perceived in a magnified perspective. The challenges of everyday living become apparent for the expatriate and his family. A culture shock occurs, which may lead to feelings of disorientation, helplessness and self-doubt. Adequate pre-departure training and careful consideration of personal characteristics of potential expatriates mitigate this phase. However, expatriates may remain stuck in this phase and it is here that a premature termination of the assignment is most likely.
■ After a certain critical point, the expatriate often overcomes the problems and acculturation to the new environment can be observed. The employee begins to understand the patterns of the new culture, improves his language competence and adjusts to everyday living. However, this improvement might not be sufficient and various outcomes to this stage are possible (see Figure 22.2).
■ In the fourth phase, the situation stabilises and the employee adapts to the new culture. Anxiety has ended and confidence in a successful assignment is gained. The expatriate might even develop a bicultural perspective. In this phase, he or she might even prefer some of the environmental influences of the host country over the situation in the home country.
The average expatriate stays three to five years on an international assignment before returning to the home country. Reasons for repatriation are also manifold. Ideally, an expatriate is repatriated after the predetermined assignment period is completed. Other reasons include the expatriate's dissatisfaction with the situation abroad, poor performance, an HQ decision that considers the expatriate too expensive for the specific position or an open position at the HQ or somewhere else that needs to be filled (Rugman/Collinson 2012, p. 436). In addition, it has been shown that the inability of an expatriate's spouse to adapt to the foreign culture as well as other family related factors are among the major reasons for expatriate failure, indicating the importance of including employees' families in an MNC's considerations (Hill 2013, p. 480).
In any case, an expatriate assignment is only successful if it ends with successful repatriation, and MNCs should therefore pay as much attention to repatriation as to expatriation. If managers and their families have been successfully expatriated, they become comfortable with living and working in the foreign culture. Returning home can be almost as challenging as the original relocation abroad. A reverse culture shock might occur for many reasons (Rugman/Collinson 2012, p. 436). The home office job often lacks the high degree of authority and responsibility the expatriate enjoyed in the overseas job. Sometimes, the employee might feel that the company does not value international experience. Frequently, employees may no longer be well connected to people at the HQ and often, their old job may have been eliminated or drastically changed. In terms of their long-term career, an adequate position might not be available at the time of re-entry. Their overall financial situation might worsen.
Given the high cost and relevance of expatriates, MNCs must attempt to minimise the potential effects of reverse culture shock because otherwise the management development related to the expatriate assignment is not successfully completed and in the long run fewer managers will be willing to take international assignments. In this regard, adequate career planning for the time after expatriation is a prerequisite for long-term success (Rugman/Collinson 2012, pp. 436-437).