Expatriate management in emerging market multinational enterprises (EMNEs): reflection and future research agenda

The last decade has witnessed the extraordinary ascent of emerging market multinational enterprises (EMNEs), which has changed or is changing the global landscape. The rise of EMNEs is no longer a novel phenomenon in the international business field, but what has boosted EMNEs’ global competition still remains an important debate among international business and management researchers. In studies of EMNEs, researchers focus their explanatory lens mainly on two realms, that is, either the institutional perspective or the strategic asset seeking argument. One realm takes an institution-based perspective and argues the influence from the home country institutions or their higher order creators, such as the emerging economy governments is one of the dominant advantages of EMNEs (e.g. Hoskisson, Wright, Filatotchev, & Peng, 2013; Wang, Luo, Lu, Sun, & Maksimov, 2014), while the host country institutions determine whether EMNEs are legitimate (e.g. Cui & Jiang, 2012). This strand emphasizes the influence of institutions from both home and host countries on EMNEs, but the extent to which would such influence have impact on firms’ international human resource management (IHRM) is not crystallized. The other realm remains with the strategic intent of EMNEs, whose international movements are arguably driven by an asset-augmenting rather than asset-exploiting strategy in order to address international competitive disadvantages and reinforce their leadership in the home markets (e.g. Cui, Meyer, & Hu, 2014). While there has been substantial attention to the strategic level of EMNE research, the functional level or micro-foundational driving forces have been examined less. For example, a critical, but often ignored, driving force – international human resources (e.g. expatriates) – has been largely neglected within academia when discussing EMNEs (e.g. Chang, Gong, & Peng, 2012; Cooke, 2014; Fan, Xia, Zhang, & Zhu, 2016; Gao, Liu, & Zou, 2013).

The successful operation of an MNE is contingent upon the availability and effective utilization of one of its strategic resources – people (Tung, 1984). There is widespread understanding that the management of a globally dispersed workforce, via IHRM, is a crucial strategic component in MNEs (Brewster, Wood, & Brookes, 2008; Sparrow, 2012). Compared with ample research findings on IHRM in MNEs from developed countries (DMNEs), there are relatively few studies concerned with how EMNEs manage their global workforce, especially in developed countries (Chang et al., 2012; Fan, Zhang, & Zhu, 2013). This has been described as a neglected phenomenon within academia by Gao et al. (2013). This special issue is thus devoted to exploring expatriate management in EMNEs. Our goal is to advance the field by bringing together theoretical and empirical contributions that hold worthwhile scholarly and practical implications.

While there is a substantial body of research evidence on the relationship between HRM practices and firm performance (see Jiang, Lepak, Hu, & Baer, 2012), much of this research has focused on firms in a single-country context and there has been little specific analysis, and lack of conclusive findings, regarding this relationship in the context of MNEs. For example, prior studies on the impact of expatriation on subsidiary performance have mixed findings. The relationship has been positive and significant in some studies (i.e. Chang et al., 2012), positive but not significant (i.e. Gong, 2003a); and even negative in others (cf. Gaur, Delios, & Singh, 2007). While researchers have explored many issues related to expatriates such as their adjustment, there remain many unanswered questions related to matters such as subsidiaries’ social performance, and the well-being of expatriates and other employees. Furthermore, little is known regarding the joint impact of boundary conditions (such as, strategic control, cross-cultural team working, and subsidiary absorptive capacity), and individual factors (such as, knowledge transfer, cross-culture adjustment and social capital) on the effectiveness of international assignments. In the context of EMNEs, both theoretical insights and empirical findings on these pressing issues are rare.

Focusing on the need for stronger theorization with regard to EMNEs, it is evident that some well-accepted theories, such as agency theory, which have been applied to expatriate management in DMNEs (e.g. Gong, 2003a), do not appear to explain expatriate management practices in EMNEs. For instance, DMNEs are more likely to employ parent country nationals when the level of required skills in the host country is low, and qualified local personnel are scarce (Gong, 2003b; Harzing, 2001). However, many EMNEs are willing to transfer managers and employees to developed countries (e.g. US, Canada, Australia) where local business skills and infrastructure (e.g. education level) are well developed.

In addition, there has been a long history of political debate in many host countries about employing foreign workers, with negative opinions manifesting as a national economic development concern (e.g. a fear campaign in some quarters of host country society, blaming foreign workers for problems such as local job losses and possible wage falls). On the other hand, recent political debate in Europe has included opinions that employing workers from overseas not only give host country businesses a real competitive advantage by introducing new ideas and technologies, but also an effective short-term way to fill talent gaps (e.g. Athukorala & Devadason, 2012; Bonache, Sanchez, & Zárraga-Oberty, 2009). Therefore, research on how EMNEs overcome or comply with local rules in order to build capable talent pools in host countries could contribute in both theoretical and practical terms.

Thite, Wilkinson, and Shah (2012) have suggested that re-examining the global staffing strategies and IHRM approaches of EMNEs remains a key research issue for the next decade. In the context of this special issue, we argue that this is an important research area that needs more attention. The objective of this special issue is to advance the theoretical, conceptual and empirical bases regarding IHRM in EMNEs. In the articles that follow, we highlight the value of different disciplinary and theoretical perspectives and research methodologies to inform understanding of expatriation in EMNEs. We bring attention to the perspectives of relevant theories in IHRM research, including resource-based views, institution-based views, and the contextualization of expatriate management studies. Each paper in this special issue engages in critical reflection of the meanings, definitions and context related to emerging phenomena relevant to EMNEs and expatriate management. Our hope is that readers will gain new ideas and perspectives to advance their own scholarly or practical agenda.

Overview of the contributions

The call for papers attracted a total of 10 submissions from authors in 11 countries. Following review, four papers were selected for this special issue. We have drawn on a network of expert scholarly reviewers for each manuscript and are extremely grateful to all of them for their excellent work. The four articles we have chosen for this special issue are well-grounded in theory, rigorous in research design, and have strong practical applicability.

The first article by Meyer and Xin (Managing Talent in Emerging Economy Multinationals: Integrating Strategic Management and Human Resource Management) argues that the next big challenge for many EMNEs is to align their human resources with their strategic ambition once they have established their first foreign operation. The authors further point out that EMNEs’ lack of internationally experienced talent has become a major obstacle to strategy implementation, thus these EMNEs need to fill leadership roles with international responsibility based abroad and at home, and they need to develop talent for future international leadership roles. The key challenge for catch-up strategies thus is to attract, develop and retain talents who can lead international operations. In this article, the authors develop a research agenda on strategic management and human resource management in EMNEs that aims to explain the obstacles EMNEs face and facilitates the development of better talent management practice. The authors propose to integrate strategic management and human resource management perspectives not only to advance theories but also to enhance the relevance of both lines of scholarship to practice.

The second article by Tao, Liu, Gao and Xia (Expatriates, Subsidiary Autonomy and the Overseas Subsidiary Performance of MNEs from an Emerging Economy) explores the mechanisms of how expatriates affect subsidiary performance. Although there is a growing body of research on the role of expatriates in subsidiary performance, the authors draw on the resource dependence theory and examine the indirect effect of expatriates on subsidiary performance via subsidiary autonomy with a moderated effect of host country institutional quality based on a sample of 181 Chinese multinational enterprises (MNEs) operating in 49 countries. After testing their moderated mediation model proposed, the findings show that assigning more expatriates enables the parent company to have tighter control on subsidiaries and reduce their autonomy, which in turn leads to a decrease in subsidiary performance. The authors also find that the institutional quality of host countries reinforces the negative impact of expatriates on subsidiary autonomy, but reduces the importance of the latter on subsidiary performance. By examining the moderating effect of host country institutional quality, this study sheds new light on the contingency of the institutional environment of a host country and EMNEs’ subsidiary performance. Thus, the study advances research on the post-entry organizational structure of EMNEs by providing new insights into the role of expatriates and subsidiary autonomy as mechanisms of external dependence reduction and knowledge exploration in host countries with different institutional qualities.

The third article by Horwitz and Jackson (Expatriation in Chinese MNEs in Africa: An Agenda for Research) challenges whether Western modernization assumptions about emerging markets, often implicit within the international HRM literature, are appropriate when applied to EMNEs, for example Chinese MNEs. The authors argue that EMNEs’ expatriation policies and practices should be viewed in a different light to those of Western firms. Taking Chinese state-owned operating in African countries and their expatriate policies as examples, political-seeking motives may be moderated by an apparent disjuncture between Chinese official policies and individual firms’ operational practices. Some potential synergies between Chinese and African cultural values are moderated by a low importance placed on the knowledge transfer role of Chinese expatriates and by the impact of the relational nature of career development including expatriate selection and an apparent low emphasis on pre-departure training. The study contributes to the literature at the organizational level by identifying explicit differences in Chinese MNE engagement in Africa, compared to Western MNEs, and by exploring how this may influence expatriate policy and practices. Overall, this paper contributes a novel perspective for the extant expatriation literature. Based on a critical evaluation of the literature, the authors develop an agenda for expatriation research in the African context.

The fourth article by Liu, Zhao and Zhou (Does a boundaryless mindset enhance expatriate job performance? An investigation of Chinese multinational corporations) draws on self-determination theory and investigates how a boundaryless mindset influences expatriate job performance, while incorporating the mediating role of proactive resource acquisition tactics and the moderating role of behavioral cultural intelligence. Analyses of three waves of data totaling 389 expatriate-supervisor dyads collected from 10 large Chinese MNEs indicate that a boundaryless mindset has a positive influence on expatriate task and contextual performance through the mediating role of proactive resource acquisition tactics. Furthermore, behavioral cultural intelligence enhances the effects of proactive resource acquisition tactics on task performance and contextual performance. The study not only contributes to the extension of expatriate success research to the organizational context of EMNEs, but also enriches the boundaryless career literature, which is particularly relevant to expatriation management because very few studies have provided empirical evidence by testing the role of a boundaryless mindset on expatriate success, although many researchers have linked boundaryless careers to international assignments.

Complexity and emerging directions

The global shift in power toward emerging markets in international business and economic growth in new territories (see Sheehan & Sparrow, 2012) presents complex and uncertain challenges for IHRM research. While articles in this issue offer varied and important contributions central to understanding EMNEs, gaps in knowledge remain in both academic and practical terms. We suggest some additional ideas for future research.

Building trust and obtaining legitimacy in host countries via expatriation management

Along with EMNEs’ global expansion, it is evident that EMNEs have faced great challenges to build trust and obtain institutional legitimacy in host countries, especially in advanced economies. According to the 2013 Edelman Trust Barometer (Edelman, 2013) which measured the trust of more than 31,000 respondents in 26 markets, EMNEs are now facing considerable trust deficit in developed countries. The survey finding showed that 76% of the respondents trusted in DMNEs; whereas 57% of the respondents answered that they did not trust in EMNEs. There is a 33-point global trust gap between DMENs and EMNEs. Chinese and Russian MNEs suffer the most profound skepticism among developed economy respondents. In order to compete with well-established DMNEs, EMNEs must identify ways to address such trust and legitimacy challenges.

The controversy over Chinese investment in Australia is a vivid example to illustrate this trust deficit issue facing EMNEs in developed countries. There is an ongoing debate in Australia about the extent to which Chinese investors should bring their own workers and managers from China to their Australian subsidiaries. Chinese MNEs are keen to bring their own labor to host countries; this preference is evidenced by the Chinese government’s insistence on foreign employment flexibility as a part of the compulsory preconditions before signing the China-Australia Free Trade Agreement (ChAFTA). Since the ChAFTA was signed in November 2014, the importation of Chinese workers and managers by Chinese investors within the framework of Australia’s existing visa system has triggered disputes (Howe, 2015). ChAFTA includes an Investment Facilitation Arrangement, which provides greater flexibility for Chinese investors to bring Chinese employees to deal with labor market challenges in Australia (Aust. Govt., 2015). However, Australia has a long history of anti-foreign labor importation legislation and public debate on this topic. On one hand, supporters argue that employing workers from overseas could offer Australian businesses a real competitive advantage by having new ideas and technologies, and may also fill talent gaps quickly, which is essential for the sustainable development of Australia. On the other hand, there are negative views in Australia, blaming foreign workers for local job losses, wage falls, and inadequate responses to industrial relations practices (Hannan & Martin, 2014).

Further, research has revealed that foreign firms from emerging economies suffer various liabilities in host countries, such as poor global image (Chang, Mellahi, & Wilkinson, 2009), and less favorable organization identification of host country nationals since they are perceived as different in terms of organizational routines and practices from local institutionalized norms (Kostova, Roth, & Dacin, 2008). Therefore, given the noticeable increase of Chinese investment in advanced economies, it is crucial to explore how EMNEs address such negative images and disadvantages by developing sustainable business. In addition, it is important to understand the role played by expatriates in achieving sustainable business. Institutional changes such as the implementation of the ChAFTA can provide an interesting context to examine this topic.

Investigating the link between expatriation management and subsidiary economic performance

Demystifying the role of expatriation has continued to attract academic interest over the past three decades (Chang et al., 2012; Gong, 2003a, 2003b; Harzing, 2001; McNulty & De Cieri, 2016). Although this research area has been comprehensively studied in many respects, which is also evident in our special issue papers, we argue that efforts to investigate the link and/or mechanism between expatriation management and subsidiary economic performance have much scope for development. Beyond the findings specific to the EMNE context, knowledge of the link between expatriation and subsidiary economic performance remains contested because empirical findings are mixed, including both positive and negative relationships (see Chang et al., 2012; Gaur et al., 2007; Gong, 2003a).

Further, there is a lack of clarity regarding the moderating effect of subsidiary boundary conditions (e.g. decision autonomy, cross-cultural team working and subsidiary absorptive capacity), and individual factors (e.g. reverse knowledge transfer, cross-cultural adjustment and social capital), on the link between expatriates and firm performance. Therefore, we call for more rigorous empirical research to investigate the link, and potential in-between mechanisms, so that we can build better understanding of the nature of contingencies and/or the underlying mechanisms for the link between expatriates and firm economic performance.

Exploring the impact of expatriation management on social performance

We would like to encourage future research in regard to expatriates’ and EMNE subsidiaries’ social performance, such as firms’ corporate social responsibility behavior, community’s acceptance of and support for the firm’s business and employees’ well-being (cf. Gaur et al., 2007; Gong, 2003b). Further, we urge scholars to explore the social impact of expatriation management specifically in EMNEs. For example, future research might explore the social impact in some host countries of a fear or dislike of investment from some emerging economies, such as Russia and China, as discussed earlier.

Drawing on our discussion, several research questions can be identified to guide future studies. For example, how do EMNEs make subsidiary staffing decisions (e.g. determine the expatriate team combination, that is, the ratio of PCNs and HCNs)? Why are different types of staffing configurations effective in improving social image and employees (including expatriates) well-being? How do EMNE expatriates and subsidiaries behave in socially responsible ways and pursue social performance to offset the triple liabilities of being foreign, outsiders and from emerging economies?

Integrating expatriate management and global talent management

Over the past decade talent management has received increasing attention (Al Ariss, Cascio, & Paauwe, 2014). Expatriate management and talent management are two overlapping areas yet remain separate, with little or no dialog (Collings, 2014). In recent years, there has been a call for integrating the two so as to enable MNEs to effectively address both the internal and external challenges (Cerdin & Brewster, 2014; Collings, 2014; Farndale, Scullion, & Sparrow, 2010). Scholars argue that successful integration between expatriate management and global talent management may shift the MNEs’ expatriate management from the former transactional focus to a more strategic focus (e.g. Collings, 2014). Developing global talent through global mobility might be an effective way to address the repatriation dilemma in a way that enables MNEs to capture and harness the opportunities coming from globalization. Given that EMNEs are significantly constrained by the lack of experienced expatriates, integrating expatriate and talent management is crucial for the long-term success of EMNEs. However, the mechanisms through which expatriate management and talent management achieve seamless integration are still not clear (Al Ariss et al., 2014). We do not have enough knowledge about how MNEs could pursue integration to maximize the synergy. More theoretical and empirical research is required so as to provide both theoretical and practical guidance for MNEs.

Exploring the linkage between expatriate management and the use of innovative technologies

The past decades have witnessed tremendous development of various technologies including information and communication technologies. Currently, there is a host of software, applications and online platforms that can be used to support expatriate management (Burgess, 2017). The use of innovative technologies in expatriate management will significantly change the landscape of the global mobility and international assignments in terms of recruitment, communication, pre-departure and post-entry expatriate training, home country support, and decision-making of international assignments, and the like. For example, the use of innovative technologies will foster global recruitment and increase the flexibility of hiring. It will also foster the pre-departure and post-entry expatriate training when most employees have a smartphone with internet access. In addition, the use of innovative technologies enables MNEs to obtain accurate data for decision-making in international assignments (Burgess, 2017). However, there is little research on the use of innovative technologies in expatriate management. We do not have enough knowledge about how MNEs take advantage of technological progresses to improve or even revolutionize their expatriate management. There is not enough information about the successful experience or lessons in the use of technology in management of global mobility. We call for more research on the linkage between technological progress and expatriate management; and how EMNEs could utilize innovative technologies in their expatriate management.

Attaching more importance to expatriate risk management

In this rapidly changing world, international assignments face increasing and varied risks. Risks that threaten expatriates and business travelers are not just confined to natural disasters and disease, but increasingly involve man-made threats such as crime, terrorism, social unrest, as well as changes of government policies and geopolitics. Media reports of vulnerable expatriates being robbed, kidnapped, attacked, injured, or even killed suggest that ensuring the safety and security of expatriates is increasingly viewed as a concern for international non-government organizations (NGOs) and MNEs (Fee & McGrath-Champ, 2016), especially for those having expatriates in distant and high-risk locations.

Expatriates are MNEs’ valuable assets with strategic and operational importance. MNEs have both legal and moral obligation to protect their well-being through comprehensive risk evaluation, detailed plans and adequate resources. However, expatriate risk management has received little academic attention. There are few systematic empirical investigations about expatriate risk management in the literature (Fee & McGrath-Champ, 2016). Of the limited empirical studies on expatriate risk management, most focus on corporate well-being including organizational reputation and performance issues, rather than expatriate well-being (e.g. Bader, 2014; Bader & Berg, 2013; Bader, Berg, & Holtbrugge, 2015; Fee & McGrath-Champ, 2016). As a result, ‘research that focuses on the human implications of crisis are surprisingly sparse in the business and HR management literature’ (Fee & McGrath-Champ, 2016, p. 3). We call for more theoretical and empirical research on expatriate risk management to provide clear guidance for MNEs to ensure expatriate well-being. Given their short internationalization history, EMNEs might be particularly vulnerable to a lack of awareness, experience and resources in expatriate risk management compared with their DMNE counterparts.

Embracing ‘new’ methodology and/or analytical techniques in expatriation research

Although we can see rigorous research design in our collected special issue papers (such as multiple waves of data collection), research methodology in expatriation research still seems dominated by regression and linear function-based analytical mindsets. While these have value, we call future research to adopt a wider range of research designs and analytical mindsets. For example, future studies might consider adopting a set-theoretic approach by utilizing the technique of fuzzy-set qualitative comparative analysis in IHRM research. Grounded in set theory, fsQCA is an analytic technique that allows for a detailed analysis of how causal conditions contribute to an outcome in question (Crilly, 2011; Fiss, 2007). fsQCA models the concept of conjectural causation, that is, the idea that combinations of various causal conditions, rather than one condition alone, are linked to the outcome (Crilly, 2011). While traditional regression-based analysis can examine interaction effects, it is usually limited to three-way interactions due to statistical power considerations and the difficulties in interpreting results. Also multiple causal paths can be detected by fsQCA, which provides more than one possible combination of causal conditions that can be linked to the same outcome (Fiss, 2007). Therefore, complemented with traditional statistical techniques (i.e. regression and SEM), fsQCA can provide a configurational approach in order to better understand how EMNEs go through different paths, to overcome negative social image (e.g. liabilities of foreignness) or achieve similarly effective economic performance.

Conclusion

Managing expatriates to achieve individual and organizational goals has always been a tough and challenging task for MNEs, especially for EMNEs. Although expatriate management has attracted academic attention for decades and has been examined to an impressive extent, there are still gaps in the literature. For example, as Bader and Berg (2013) note, existing research on expatriate management tends to focus on individual characteristics and cultural factors, and hence cannot fully explain the variance of expatriate management. Given that international assignments are vital for MNEs of all types and sizes worldwide and the number of expatriates is still steadily growing (Bader & Berg, 2013), more efforts are required for researchers to contribute to this promising and important area.

Finally, and perhaps most of all, we would like to thank the contributors to this special issue, particularly the authors who have shared their research and ideas, and the reviewers who volunteered their time and assistance to support this endeavor to advance knowledge on expatriate management and EMNEs.

Disclosure statement

No potential conflict of interest was reported by the authors.

Funding

This work was supported by Australian Research Council [LP110200526].