Expatriation in Multinational Companies

In the present, international trade is growing faster and faster as well as the enormous quantity of direct foreign investment of FDI which undertaken by multinational companies. Moreover, rapidly and intensely increase in world competition also forces MNCs to maintain their control over their oversea operations or international subsidiaries. To obtain competitive advantage, MNCs need to ensure that subsidiaries are managed to follow their expertise strategies, standard control, procedure as well as their strategic goals.

From this reason, expatriation is one alternative for MNCs to gain a powerful to cooperate and control over their subsidiaries In contrast, from the review of the literature, indicates that expatriates are associated with a several serious problems. Using expatriates are expensive by approximately two or three time in comparable hiring the host country nationals. There are costly not only on recruiting and selecting, measurement of expatriate performance but also on their family such as children graduation.

Furthermore, there are the large percentages of expatriate failure among multinational companies in terms of adaptation problem in their new environment, unsuccessful expatriate adjustment as well as poor job performance. Moreover, expatriates suffer from personal and family problem which lead them early return home or premature repatriate. This paper is structures as follows. Firstly, begins with the overview of expatriates and number of using expatriate in Multinational companies. Secondly, reasons for employing expatriates of MNCs.

Thirdly describes three general motives which cause MNCs sent out expatriates and three major roles of expatriate follows with the role of international knowledge transfers, expatriates as control mechanism as well as expatriate role in as global team in HR practice. Finally end with the conclusion. Overview of expatriation Expatriates are workers and who work in headquarter company who move to work and live in foreign country with their family for the particular period of time of at least one year(Tayeb, 2003).

Many multinational firms have known that hiring expatriates are costly not just only high salary of the expatriates but also high expenses on their families, relocation expenses, as well as accommodation and special allowances. Moreover, it was very difficult to find the suitable expatriates who willing to work abroad which far away from home. Besides, there were the high quantities of expatriates who failed from the international assignments and come back home earlier as premature repatriates. Although expatriates are expensive, using of expatriates still continue.

Hailey 2000 mentioned that there are growing demand for staffing expatriates by multinational companies and international firms. Most of MNCs expected to employ more expatriates and international executives. This is supported by the evidence of the researcher who surveyed on increasing demand for expatriates with oversea experiences (Torbiorn 1994; Scullion1995; Harvey 1996). The aim of MNCs was desired to expand their global market as well as transfer their professional skilled and knowledge to their hosts.

Furthermore, they need to bring their staffs to globalization to learn and develop their international coordination and communication system. Number of expatriates Brewster(1991) argues that although there may be a reduction in the number of expatriates sent abroad by the large multinational companies, small and medium sized MNCs are sending an increasing number of expatriates abroad(Brewster 1991). Furthermore, most of companies sent expatriates to other developing countries rather than to developed countries (Harzing2000).

Besides, expatriated from those developed countries are transferred from parent to host especially in joint venture and merger and acquisition situations. From another literature , Brewster and Harris(2000,p. 77) quotes Harzing as arguing that "Old subsidiaries of small MNCs are more likely to have a local managing director, while young subsidiaries of large MNCs are more likely to have an expatriate managing director". Moreover, expatriates position filling was totally high in Japan and German if compare to Europe countries as USA, UK, and France (Harzing 2000)

For non-commercial organization, there are more rising in international governmental and non-governmental organizations, international aid organizations, and charity organizations which led to the increase in number of global employees. From this reason cause the growth on expatriation rate in these non-profit organizations. However, there was lack of research and evidence on the expatriation in these non-commercial organizations (Brewster and Harris 2000). Reasons for employing expatriates According to staffing policy, expatriation was used by MNCs who selecting the employees under the Ethnocentric Staffing Policy.

These firms will hire staffs from headquarters so- called parent- country national (PCNs) to work in oversea subsidiaries. The ethnocentric staffing approach frequently results in high level of authority and decision making in parent company (Dereskey 2006). Due to the advantages of this approach, PCNs are well-known and familiar with the company policy, procedure, technologies, product as well as goals of the company. Moreover, they already known how to communicate and cooperate with headquarter.

Tayeb (2003) argued that multinational companies preferred to employ expatriate managers from same nationals as the parent company in significant department such as head of finances. They trusted them to protect their own shareholder's interests. Besides, they did not entrust that staffs of the host countries are available with the significant expertise skills. Furthermore, the companies desired to increase intercultural capabilities in its organizations others branches in abroad so expatriation was the suitable option to develop their international operations.

Most of multinational companies decided to use expatriates in top management positions or under certain circumstances for example, in the early stage of establishing new subsidies and when there was the shortage of professional skills in the host country. (Hiltrop and Janssens, 1995) MNCs controlled their foreign subsidiaries operations by using of expatriates in the sensitive jobs especially executive, technical, and financial positions.

They believed that these expatriates were more willing to follow the head office policies and look after the interests of parent organization while the local staffs more tend to against and follow their nationals or host -government policy (Tayeb 2000). Moreover expatriates are considered as the loyalty staffs to look after the benefits of parent organizations rather than host. Besides, most of multinational firms faced with the problem of finding suitable host-country nationals which was frequently more difficult than finding suitable workers within the headquarter company.

Furthermore, selecting and recruiting host-country nationals were obstructed by language barrier because the difference on various languages and communications. Some international companies hired expatriates to maintain cultural values and working pattern in organizations. For instance, banks, airlines, and oil companies were increased on sending expatriates to operate and control the standards in the host location in another country. These expatriates normally stayed in one country long enough to get familiar with the local people (Tayeb 2000).

Moreover, they played an important role as observe and control the host-country operation depends on the parent company policy. Besides, they had responsibility to make sure that parent organization have a controlling influence over the host organization. Furthermore, some parent companies sent their expatriates to the host country as a commitment to guarantee that they gave them the fair treat as offer up-to-date technology management ability and technical training as well as convinced the customers that parent company paid attention to continue and develop the relationship with them (Tayeb 2000).