The Role of Expatriates in the International Management - Term Paper Example

Assignment: critique of an individually selected research paper within the field of International People Management - " An Analysis of the functions of international transfers of Managers in MNCs " - Anne-Wil Harzing, 2001 Table of Contents 1. Introduction 2. The choice of a paper to critique 3. The aims and intentions of "An Analysis of the Functions of International Transfers of Managers in MNCs" 4. Structure of the article 5. Hypotheses in Harzing's paper 6. Methodology and presentation 7. Results, conjectures or both 8. Conclusions - Harzing's and ours 9. References Introduction This is a critical review of the research paper "An Analysis of the Functions of International Transfers of Managers in MNCs" by Dr. Anne-Wil Harzing (Harzing 2001), Department of Management, University of Melbourne, Australia (MNC means multinational corporation). The paper is reviewed to identify both strengths and weakness. Comments are also given concerning possible extensions or modifications to further improve the usefulness of this work. In making this review, we seek also to identify the opportunities associated with such research and to assess possible limitations as well as outcomes. The research in this particular case applies to an aspect of international people management that is the international transfer of managers. We assess the immediate opportunities of such research as being determined by the number of international management transfers in any given period, the importance to the MNC of such transfers and the possibility of accessing useful data relating to these transfers. International management transfers are a frequent occurrence and there is a corresponding base of information that can be researched or is already available. Management transfers are also relatively important to MNCs. They want to make sure that it works: the impact of a good or bad managerial decision often weighs more that of a non-managerial employee, and this impact increases with ascending management rank. This also motivates MNCs and their representatives to respond to requests for data in the form of questionnaires, if these questionnaires are appropriately constructed and presented. The limitations of such research are in some ways connected with the discussion on the opportunities. The first limitation is that of the willingness or the availability of the relevant contacts in the MNCs to give the data required The second is the way on which such data is to be amassed, either by direct contact (telephone) which can be time-consuming, expensive and not necessarily effective, or by indirect means such as questionnaires sent through the post, which can then increase the elapsed time before results are available as well as the difficulty of chasing up replies and information. Not mentioned in this paper from 2001 are the possibilities now available by Internet with online questionnaires. As a first recommendation, consideration should be given to doing surveys of this time online where possible (Dr. Harzing has perhaps moved to internet-based questionnaires since she wrote this article). Although for a pure Internet-based solution it would also be necessary to know the email address of the person to be contacted, hybrid solutions are also possible: for example, send out a letter which contains instructions to go to a website to fill in a survey. The choice of a paper to critique Our choice of paper was determined by a number of aspects. We sought papers that reported empirical research, either from the creation of primary data, the utilisation of secondary data, or both. We also sought papers that had real meaning and relevance in the field of international people management. Of the various candidates reviewed, we selected Anne-Wil Harzing's paper as fulfilling these criteria. The aims and intentions of "An Analysis of the Functions of International Transfers of Managers in MNCs" The article states its aim as better identification for the reasons for which MNCs (multinational companies) send out expatriates, meaning management expatriates, and of the extent to which the different national origins of an MNC determines these reasons. The author also states that arguments are set forth as to the importance of the consequences of such expatriate management. Looking at this from the following perspective, a company in the UK may send out expatriates for a particular reason (the reason being determined, at least partially, by the UK origins of the company). This reason may or may not be compatible with the foreign country subsidiary to which the expatriate manager is being sent. What the abstract of Harzing's paper does not claim is that any arguments or suggestions will be made to modify expatriate management reasoning as a function of the nature of the foreign country and/or its subsidiary in relation to the parent company. We investigate to what extent such suggestions are or could be made. We can state that the author's aims and intentions have been achieved in this paper, but the question is also whether these aims and intentions were sufficient, or at least whether they could reasonably have been extended within the context of the article. Structure of the article The article is laid out clearly with appropriate sections. The abstract, an initial and sole paragraph, explains the aim of investigating why management expatriation is done, how it is done and what the consequences might be. It is also made explicit that the discussion is based on empirical data gathered at the source, namely from MNC Human Resource departments and from expatriate managers themselves. A reader, upon being presented with this abstract, will know practically immediately if the article is in line with his or her interests. What the reader will not know is whether any consequential conclusions are reached, which is a point that could be made clearer in the abstract. In the introduction to the article, Harzing repeats the aim of finding out why MNCs "send out expatriates". As a point of detail here, this is the second time that Harzing uses the general case of "expatriates" when the article is particularly concerned with management expatriates. Even though this focus is effectively made in the rest of the paper, there are important differences between the expatriation of managers and that of other employees (for example, internal consultants, specialists, or technicians). In principle, we would recommend that in such a paper, "management expatriates" was used rather than just "expatriates". The reader is also expected to understand the term "cultural distance" which is a reference to Hofstede's work, although intuitively a reader could understand "cultural distance" to be "cultural difference" and comprehend the nature of the discussion in this way as well (Hofstede 1980). The introduction also clarifies an important point. The paper's aim is also to build on existing theories by providing empirical evidence to support them. However, the paper is not destined to expand upon the theories themselves. Once again, we raise the question of how far the paper could go in this sense and whether there is perhaps room for not only confirmation of existing notions but also for their extension. The next section, "Organisational Functions of International Transfers", conducts a summary literature review using an article by Edstrm and Galbraith as the point of departure (Edstrm & Galbraith 1977). Harzing also uncovers the existence of papers on the subject written in German, pointing out that the language difference could explain why they were little known in Anglo-Saxon circles. Such a phenomenon would not necessarily be limited to the German language. French research into management techniques is also done, and other languages such as Italian and Spanish are used as well. Harzing raises an interesting point. As international transfers of any kind are likely to involve language differences between the home country and the country of expatriation, academic literature is likely to exist in a variety of languages and to be hitherto un-translated into English. Yet it is this same literature that is a necessary complement to understand not only from the MNC parent company viewpoint, but also from the expatriate country viewpoint as well, the opportunities and challenges of successful international management transfer. Harzing's gathering of empirical evidence from the desks of expatriate managers in situ goes some way to providing an initial balance here. If the reader is not already familiar with the main terms used in this paper, here are some explanations. Harzing's paper is centred on the terms used to describe three possible reasons for international transfers of managers. The first is "position filling", when a position in a foreign subsidiary must be filled but there is no suitable candidate available locally in the foreign country. The second is "management development", in which the goal is to supplement a manager's training by sending him or her to a foreign subsidiary to take on new and career-enhancing responsibilities. Finally, the third is "organisation development", where the focus now includes the company itself because the international transfer is seen as conducive to improved relations between the parent company and its subsidiary, and by extension improved company performance as well. Harzing also points out how other authors, including Boyacigiller, extended some of the initial limitations of the model proposed by Edstrm and Galbraith, to indicate how not only an MNC acts upon its international structure, but that in the opposite sense, the international structure and context then positively influences the business perceptions of the MNC (Boyacigiller 1990). Harzing proposes that the initial label of "organisation development" be replaced with "coordination and control". Unfortunately, this new name does not add anything to clarify the debate or to indicate that the influence is bi-directional both to and from the country of expatriation and the MNC. Perhaps "multi-lateral - " or "reflective organisation development" would be a more descriptive choice. The section concludes with the statement by Harzing that much of the preceding literature was done from the viewpoint of the corporate headquarters of an MNC, and that events in the country of expatriation could well unfold differently compared to the corporate plan in headquarters (an expatriate manager taking on a different role than the one planned, for example). This is used as justification for the collection of data at the subsidiary level, which in itself and as indicated above, can be considered a good thing. It remains in this case for the corporate headquarters to take note of the findings and to determine whether there is significant divergence with what is planned and what actually happens. It should be noted that a revised version of Harzing's paper appeared in the journal "Employee Relations" of 2001. The overlap between the readership of this journal and the corporate headquarters, in particular the Human Resources department, remains to be seen. Hypotheses in Harzing's paper Harzing then develops a number of hypotheses from existing literature and theories to be tested in the light of empirical data gathered. Hypothesis number 1 is in part the translation of the management theories or observations reported from existing sources: namely, that foreign subsidiaries of German and Japanese firms will attach more importance to "coordination and control" than would subsidiaries of UK and US firms. The nuance here is that the hypothesis applies to the subsidiaries whereas previous literature had applied this to corporate headquarters. The second part of Hypothesis number 1 is that, on the other hand, for the "position filling" and "management development", there would be no difference between the importance attached by subsidiaries of German, Japanese, UK or US firms. There seems to be no intuitive reason to think this was the case. It is not clear what justifies the expression of the hypothesis in this case even if empirical data then supported its veracity. Hypothesis number 2 deals with the perceived importance of the position-filling function and its correlation with developing countries where skilled management may be in shortage. The hypothesis is that Latin American subsidiaries in particular would attach more importance to position-filling. Intuitively, it seems that that this might be the case, so this hypothesis can reasonably be advanced. Afterwards, the empirical data will tend to prove or disprove as appropriate. To develop Hypothesis number 3, Harzing puts forward reasoning statements involving cultural distance and its interrelationship with the three possible reasons for international management transfer. The suggestion that high cultural distance correlates with high organisation development (or coordination and control, to use Harzing's appellation) seems intuitively compatible. The correlation with position-filling (positive) and management development (negative) remains however somewhat conjectural, and would be better presented as such, rather than as an "expectation". However the main aspect of Hypothesis number 3 is that in the expression of the hypothesis, Harzing has switched back to a corporate headquarters viewpoint here. It is not clear either from the empirical results (largely based on data from subsidiaries, not headquarters) or from the viewpoint taken, what Hypothesis number 3 really brings to the discussion. Methodology and presentation Harzing's methodology is clear and for anyone wishing to do so, can be reproduced. The data gathered specifically for this article was in fact broken out of more comprehensive data gathered. Choices of companies and subsidiaries to be contacted are explained and represent a good spread, unlikely to be biased in any undesirable way. The response rate of 20% amongst subsidiaries is to be applauded (compare this with commercial mailings that generate no more than 8% after telephone follow-up, often considered an excellent score!) and suggests that at a practical level the survey was well designed and executed. A comment in the article concerning the nuance between using "organisation development" from Edstrm and Galbraith, or "coordination and control" as evidenced by German authors, remains unclear. As a shortcoming in this respect, the appendix to the paper does not include enough of the questionnaire to understand the importance of this nuance and the impact that it would have on interpreting the results. The results are presented in conjunction with a report of different analyses and tests effected. Once again, the detail is not always present. When Harzing writes about factor analysis, there is no indication of how this factor analysis was performed and whether this was a mathematical analysis or an empirical conclusion arrived at simply by looking at the data. The use of factor analysis is certainly a good thing in principle as it allows the isolation of the major contributing factors and the possibility of a meaningful discussion on the results. However as a mathematical exercise, it is unclear if the loading factors spoken about are really the result of a full factor analysis. More information from the author would be required on this point in order to clarify. Likewise in a statement concerning the importance of functions in the perception of the subsidiary, the notion that expatriate presence was responsible for less importance being attributed to these functions requires further explanation and indeed justification. When referring directly to the data accumulated, Harzing's remarks are easier to comprehend and to agree with. There is an interesting remark made on the relative importance attributed to coordination and control functions, where the data shows that the general situation of headquarters relative to subsidiaries is inversed: in this case more importance is attached by the subsidiaries to these aspects than by the corporate headquarters. Harzing offers two conjectures about why this might be the case. It would be of interest for example to collect supplementary data allowing a more rigorous analysis and justified conclusions. Conjectures are offered as well concerning the importance ascribed to the position-filling function, where once again we are back in the model where more importance is given by corporate headquarters to this factor in international transfers than by the subsidiary. These conjectures are perhaps best considered as possible points of re-departure towards further research, if they can be seen to be intuitively probable or if a new exercise in collecting primary data permitted to incorporate them in the questionnaire. Results, conjectures or both In the section on the testing of the hypotheses, Harzing seems at odds with a previous remark in the article, when she states that it might be expected that in subsidiaries with many expatriates, managers would be more likely to consider any of the three functions (position-filling, management development, coordination and control) as more important. As this remark comes after the one made in the section concerning the results that show opposite results, it is hard to see why such an expectation might still be justified. In any case, the Kruskal-Wallis test that is applied makes sense as it tests the equality of medians between the group of results from headquarter and the group of results from the subsidiaries: the equality turns out from the calculations to be strong. The first hypothesis, concerning subsidiaries of German, Japanese, UK and US companies finds its empirical proof in the results from the data. Harzing also makes the most of the data to present some related conclusions, and points to supporting evidence from other papers as well. Hypothesis number 2 also finds corroboration in the data collected. Harzing goes on to note the importance not only of position filling but also of coordination and control to subsidiaries in the Far East (hypothesis 2 originally concerned position filling as viewed by Latin American subsidiaries). On the other hand she does not offer any conjectures as to why this might be so. It would be of interest for example to compare the data with models suggested either by Hall or Hofstede to see what correlation might exist with Hall's high-context, low-context model (Hall 1976) or any of the five cultural dimensions defined by Hofstede. Hofstede is mentioned by Harzing when discussing the justification for Hypothesis number 3. Hofstede's definitions of cultural dimensions and the concomitant cultural distance have the merit of being clear and rapid to understand, even if full agreement on their applicability has yet to arrive. Common-sense application of these notions makes Hypothesis 3 intuitively attractive. Yet, as we stated before, the hypothesis concerns headquarters of MNCs and not subsidiaries. Yet another remark by Harzing in the following paragraph raises a question mark as to the overall direction of the article. It is stated here that the article was written with a choice made to focus on the cultural distance between home and host country, meaning headquarters and subsidiary. While it is certainly commendable to bring fresh data to light that allows further exploration of this aspect, the article should, and in parts does, go further. Harzing does well to point out relevant extensions to knowledge in this domain, for example the correlation of position filling in large, new subsidiaries and that of management development in larger and older subsidiaries. What is less satisfactory is the number of conjectures that accompany these otherwise factual statements. In the case of management development showing a strong correlation with larger and older subsidiaries for example, Harzing offers the conjecture that it might be because such subsidiaries are more established, more important to the parent company and better suited as a training ground. While this may or may not be true, there are many other possible conjectures that could be formulated on this subject. By way of example, managers eligible for transfer might elect to work in such subsidiaries in preference to other new, smaller subsidiaries, and by an effect of mutual encouragement, increase the point of view of the corporate HR department that these subsidiaries are better suited. However, from a point of view of training, flexing and developing managers to be able to weather the constant change in today's business environment, there is as much a case to be made for transferring them to new establishments where they would learn to be more effective than if they had stayed within the boundaries of known and slower-changing divisions. Conclusions - Harzing's and ours In discussing the results and the conclusions, Harzing limits comments to what MNCs do and to what extent why they might be doing it. However, MNCs reading the article could justifiably ask, "how can we do it better". Some of the comments are simply different versions of what has been said elsewhere in the paper and the conjectures while all being possible give no real hint of the probability of their being true. The section on the conclusions to be drawn goes a little further although the generalisations are in greater number than any particular practical applications. Harzing takes the viewpoint of corporate HR departments trying to make a success of international management transfers by assorting the vacancy or opportunity to be filled with the profile of the candidate to be considered. What might have been of immediate practical use would be a matrix showing how different profiles of parent companies (German/Japanese "cooperative", UK/US "arms-length" to cite some examples) might improve their performance and results from international management transfers in different subsidiary countries. We see this as being a desirable, even necessary part of such a paper. International people management and international manager transfers in particular are everyday real-world happenings and need to see practical recommendations based on sound conclusions from valid data. Crudely put, Harzing scores two out of three in such an analysis. Can she score the third point as well Harzing does put forward some suggestions for further research, suggesting a tighter focus on a smaller number of home and host countries, and possibly the reverse transfer of managers internationally from subsidiaries to the parent company. She ends her paper with the hope expressed that "MNCs might be able to able to use international assignments in a more strategic way". Indeed, but this seems more the starting point than the finishing point. Management, unlike Mathematics (or some of it at least), is firmly grounded in the real world. Investigations of management in its broadest sense needs to be linked to some notion of practical conclusions that can be put into action or at least tested, after a reasoned argument suggesting that they should be effective. Thus, a UK company, traditionally strong in "arms-length" management and granting autonomy to subsidiaries, needs to be aware that in some foreign subsidiaries such as the Far East, a more cooperative stance will be necessary to improve performance, simply because, culturally speaking, this is the wish and the expectation of the subsidiary organisation. Such recommendations do not need to complex; in fact, the converse is to be preferred as it is the simple, direct conclusions and recommendations that will best serve the interests of MNCs, the economy and the general working public. To conclude therefore on Harzing's paper, we can state that it achieved its stated objectives, but that there was room to usefully extend these objectives. The quality and thoroughness of the research is not in question, neither are the immediate conclusions and observations from the data collected. Our comment, that we wish to be taken constructively, is that from this solid base, it is now time to replace the additional conjectures, to which no notion of probability can be assigned, with more reasoned extensions that can in turn by applied in everyday business life and international people management. References Boyacigiller, N. 1990, The role of expatriates in the management of interdependence, complexity and risk in multinational corporations, Journal of International Business Studies, vol 21 n 3, pp 357-381 Edstrm, A. & Galbraith, J.R. 1977, Transfer of Managers as a Coordination and control Strategy in Multinational Organizations, Administrative Science Quarterly, vol. 22 (June), pp. 248-263 Hall, E.T. 1976, Beyond Culture, Anchor / Doubleday, New York. Harzing, A. 2001, An Analysis of the functions of international transfers of Managers in MNCs, www.harzing.com (retrieved 31st March 2008). Hofstede, G. 1980, Culture's Consequences. International Differences in Work-Related Values, Sage Publications, London. Bullet Points International Management Transfers Research paper by Dr Anne-Wil Harzing, University of Melbourne Primary data collected on importance assigned to Position-filling in foreign subsidiaries Management development Coordination and control Viewpoints for corporate headquarters and foreign subsidiaries Results and hypotheses tested / supported Importance of coordination and control to "cooperative companies" Importance of position-filling to Latin American countries Correlation between cultural distance and coordination and control, position filling (positive) and management development (negative) Results based on data collected from a population of 122 MNCs (multinational companies): 287 subsidiary responses, 51 headquarters responses Positive points / Strengths Robust method of data collection, data analysis relating to subsidiaries rather than (just) corporate headquarters Clear paper, supported hypotheses Some extensions in conclusion making use of the data acquired Weaknesses Needs to go further in practical conclusions Replace conjectures with no assignable probability with reasoned conclusions Avoid the tendency to take the corporate point of view This has already been researched The primary data collected is for the subsidiaries more than the headquarters Recommendations Extend the Harzing's conclusions with a practical matrix of type of MNC vs. best practice per type of subsidiary for international management transfer Correlate the data with other models such as Hall (high context, low context) to generate further practical suggestions based on reasoned analysis, for MNCs. 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