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In the present day business environments are best adapting to the globalized world. "Companies are no longer bound to a specific nation; in fact most of the world's largest corporations have conducted business outside their home-country" (Ashamalla, 1998). One aspect of globalisation on business is the growing importance of international economic activity and increased mobility of human resources. This in return gives a reason for companies to give extra consideration to the development, understanding and management of International Human Resource Management (IHRM) policies.
"International human resource management (IHRM) is defined as a set of distinct activities, functions and processes that are directed at attracting, developing and maintaining the human resources of a multinational company (MNC)" (Daniel & Per, 2007). The objective of these activities, functions and processes is to assist the organization in order to increase its efficiency regarding IHR. "A successful IHRM is for most firms vital and critical to their accomplishments, it could be the distinguishing factor between survival and extinction" (Shen, 2005) and so, the IHRM is increasingly being acknowledged as a major determinant of success or failure in international business.
"As organisations become globalised, there is an increasing challenge to use expatriates on international assignments to complete strategically critical tasks" (Brewster, 1998). "Multinational corporations (MNCs) use expatriates, not only for corporate control and expertise reasons in vital global markets, but also to facilitate entry into new markets or to develop international management competencies" (Bird & Dunbar, 1991). Managers who are assigned from the headquarters to the host-country with the purpose of controlling the operations of the subsidiary are classified as expatriates (Banai & Harry, 2004).
An expatriate is an employee sent to a foreign country by the organisation. The organisation which sends the employee is known as parent company and the foreign country where the employee is sent to is known as a host country. For example; General Electric's (GE) which has large operation in India, has sent many of its U.S. executives to India to oversee developments there. The executive would be called as an expatriate, the General Electric's would be called as the parent company, and India would be called as the host country. Similarly, if an employee from India is sent to the U.S. they would be called as expatriates.
Initially it was seen that the expatriation was done on ad-hoc basis and so they used to follow their basic HR strategy. This was due to many reasons. It's mostly seen that Organizations usually penetrate foreign markets through exporting than they boost their involvement through licensing and joint ventures and ultimately they set up their wholly-owned subsidiaries in that country. In due course of time, with the increase of the importance of expatriates and the cost involved in the process of expatriation, these organisations have been coerced to devise IHRM strategies which could be used globally as the organisation grows. According to Bonache and Brewster (2001), once the organisation gets internationalised, both national and corporate cultures are conveyed through institutionalized practices such as, decision-making procedures and corporate policies. These are than manifested in market-specific knowledge.
AIM OF THE RESEARCH:
To explore the corporate strategy and find out if there are any serious consequences pertaining to the success or failure of the expatriates of MNC's.
OBJECTIVE OF THE RESEARCH:
To provide a clear cut meaning of expatriate in corporate language.
To support the meaning with examples.
To facilitate a clear understanding of corporate strategy of MNC's.
To offer critical study of factors affecting the expatriate strategy of MNC.
To study the case of a successful MNC and its expatriate strategy.
"A significant challenge underlying geographic expansion is the greater need for coordination and control toward the achievement of an efficient, integrated organization" (Bartlett and Ghoshal, 1991; Reich, 1991) and so as Boyacigiller, (1991) articulates one way forward for MNC's is, to obtain and maintain this integration is through expatriation, or the assignment of home-country managers to overseas locations. Expatriation facilitates organizations to gather and maintain a base of information of the complexities of international management by using the organisational learning of the expatriates (from their overseas experience). However, while expatriation seems too beneficial and attractive for organizations intending to accumulate foreign market knowledge and facilitate organizational renewal, "expatriation as an attractive method the enormous investment involved in this type of strategy challenges the organization to select, retain and successfully repatriate the appropriate individual through sound human resource management policy" (Bonache and Brewster, 2001). Apart from the costs incurred, there is a question of how successful expatriation is really. Therefore, aspects affecting the successful expatriate experience are very important to MNC's and this envisages their expatriate IHRM strategy.
Expatriates are often selected because of their technical/business skills, experiences and informal knowledge about the parent company. "The main reason for sending an expatriate to the host-country is to control the overseas operations and achieve a high level of integration across global operations" (Harvey, et al., 2001).
However, there are two major aspects or reasons for sending expatriates to the host country, which organisations consider while devising there expatriate strategy. The first one is when a company wants their manager to learn and equip the best technique available in the world. For example; Tata Motors which is an Indian company would send his managers and engineers for duration of time to Jaguar Land Rover, which is recently taken over by Tata from Ford motors so that they can gain knowledge. The other one is when a company sends its most skilled employees to cater the need its international subsidiary or the international client. This can be explained more by the example of the IT companies of India like Infosys, Wipro, TCS etc. who send their best men to cater to the need of their clients abroad.
In any case the IHRM strategy makes sure the expatriates don't fail because there are many reports on expatriate failure. Recent studies shows that "as many as 40 percent of the American expatriates fail with their assignment" (Jasawalla, Asgary & Sashittal, 2006). According to Ashamalla (1998), expatriate failure is defined as an early return to the home-country without completing the predetermined intention of the assignment. Furthermore, the pundits have divided expatriate failure in few types. Most important types are when the expatriate comes back home before the intended termination of the assignment and when the expatriate goes on till the end but performance is below standard. IHRM strategy also makes sure to save organisation from both ends of cost and reputation, which would be studied in main research work in detail.
The above figure shows an example of IHRM strategy which allows company managers to recognize the way to manage an international assignment and whether a local should fill it or an expatriate. The frame of the diagram above outlines four types of assignment based on the extent of significance of the assignment to the parent organisation and points out the most appropriate type of appointment for each case. The managers would be able to plot their assignment against the Portfolio which would than enable them to make logical and realistic decisions.
Although there are number of companies which have implemented such IHRM programs but still, there remains prominent issues like expatriate failure and excessive costs attached which final work will put light on.
According to Hsieh, Lavoie and Samek (1999) expatriates have an essential role for how a majority of the world's MNCs develop their International ventures. Quite often organisations prefer keeping them in the host-country to build up and make way for new operations rather than repatriating them. Companies brief them before they leave (pre-departure phase) to assist them with basic information vis-à-vis work and living-related issues.
Business Peers have partitioned expatriation into three stages, pre-departure, during assignment and repatriation. While expatriation is vastly in use by organisations lately and considerable research has already been done, still the researcher finds it under-researched and hopes to find more in the final work.
The above diagram taken from the web shows a miniature representation of the phases involved in the process of expatriation. The researcher will study all three phases involved till.
As the IHRM strategies MNC's utilize is very important for the success of their companies and as researcher thinks previous studies are not sufficient, so the researcher finds it interesting and valuable to further investigate MNC's IHRM strategies.
The researcher would also put some light on repatriation because of its relation with the proposed topic.
PURPOSE OF THE RESEARCH:
Based on the discussion above, the purpose of the proposed study is to provide a better understanding of MNCs' expatriation strategies in all the three stages discussed above with appropriate examples and supported by a case study of an organisation.
The proposed approach is primarily descriptive. The motive is to register document and describe the strategies of some specific MNCs in connection with a specific phase of expatriation. The researcher would try to shed light on areas previously not investigated or there is no empirical data on, it may be regarded as potentially exploratory.
The decision for choosing a qualitative research approach is based on the fact that one of the objectives for a qualitative research approach is to explore a limited area in a more profound way. In consideration of the purpose and research questions set for this proposed study aiming for in-depth descriptions of occurrences on a limited scale, the researcher finds the qualitative approach namely multiple to be more appropriate.
The selection of the research strategy and the approach is widely based on the type of the questions included in the research. To facilitate the research, the researcher would consider various methods of research.
In the background of the study and literature review the researcher has shed little bit of awareness of/on what the proposed study is going to be? The researcher will assess all the ideas in order to get to a conclusion along with few recommendations to the corporate sector and future researchers. The research questions which will be answered in this proposed research studies which are as follow.
These are the tools to get the answer for the questions in the research study. Thus the objectives are;
Ask the company's corporate managers through interviews, about what they mean from expatriates?
Then ask the top managers about, the value of expatriates for an expanding company?
To find out what are the corporate IHRM strategies regarding the expatriates?
What could MNC's do to make better use of expatriates?
What are the issues organisations faces while devising the expatriate strategy?
Is expatriate failure a concern for the organisations that spend millions on expatriates?
There are various types of research philosophies to conduct the research the most famous types are;
This type of research explained by "Davidson" (2003) is the one which mainly based on the description of facts and this will actually required more extensive information for the analysis. So, this approach provides extensive understanding of facts that's why this will be used in this research.
This approach is aiming to give the thorough description of research in the context of issue but this could only be used when the facts are exactingly there because it will just answer the factual questions. So, the scope of this approach is lesser as the focus is really narrow within some questions like, what, when and how.
This explains that how an event could occur and this will help to create hypothetical research study through assessment of facts and figures. This type of research study needs to have strong relationships between data available to formulate the hypothesis.
So, this research study will have the two of them "Exploratory" and "Explanatory" as explanatory will need to answer the questions like, how and why.
In this study the researcher will use the literary sources and the interviews from different groups to get the answers of the research questions, company's web pages etc.
This means that the data has its integrity and accurate for the research purpose. The selected methods to get the data would be personally assessed by the researcher and therefore it will work in the light of the literary facts. Then the questionnaires would be formed in such way so that they won't look too bulky but rather easy to reply by the people.
The research interviews and questionnaires are formed and they will be assessed by the researcher himself. The data will be gathered and then compared to the available information to discover if it fulfils the requirement.
The research usually demands from the researcher about the selection, things like organization, people, etc so, the researcher would choose sample from the bigger groups to attain the information.
Experiments will be used in this research study to investigate the relationship between the existing literature and the theories given on the topic.
Surveys will be conducted to facilitate this research study to get the whole scenario and to include all the aspects of the topic into the research study.
Questionnaires will be given to the selected company managers to assess their views about the company's IHRM strategy.
The data collected for the research would be screened so that the information which is not relevant can be omitted thereby saving time and bulk of the research. The researcher would need to consider the present clear discussion of data after screening followed by the conclusion and the suggestions to facilitate the data. In this case the researcher would analyse the data in empirical way which would compare the collected data and the available literature.
Data is usually of two types "Quantitative & Qualitative" to form the research case so, in this case the data collected would mostly be qualitative ones.
The details of the people involved in filling the questionnaires or interviewers would be fully confidential. References would be used in the research to state the source and authors of the secondary data.
This is the relatively smaller version of original piece of work. The researcher would put in much of the resources required for a proper and decisive research.
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