Human resource management for international joint ventures: expatriation and selective control

Abstract

It often can be witnessed that companies as a matter of principle assign expatriates into key joint venture positions. However, that basic attitude may be one of the fundamental reasons for human resource problems. Building on transaction cost economics it can be argued that selective control via functional gatekeepers instead of overall control offers an efficient mechanism to reduce opportunistic behaviour in joint-venture relationships.

Keywords:

• International joint venture
• expatriation
• control
• transaction cost economics

Notes

Rüdiger Kabst, University of Paderborn, Faculty for Business Administration, Economics and Business Computing, Chair of Management and Human Resources, 33095 Paderborn, Germany (tel: [phone]; fax: [phone]; e-mail: [email protected]).

1 The core human resource problems for IJVs mentioned in these studies are: staffing friction, impeded career opportunities for host-country employees, impeded career opportunities and repatriation difficulties for expatriates, split loyalty, compensation differences, incomplete information, limited delegation, fussy organizational culture and unfamiliarity.

2 Expatriates are likely to act in ways which the respective parent would find acceptable, as incentives for expatriates are still tied to the parent company. For example, bonus payments are still based on the parent's profits or career plans are clearly predicated upon returning to the parent (Killing, 1983: 26–7).

3 As examples one could mention Blodgett (1991), Chowdury (1990), Cullen et al. (1995), Hennart (1991), Hennart and Larimo (1988), Hu and Chen (1993), Kogut (1988), Nakamura et al. (1996), Osborn and Baughn (1990) and Pan (1996).

4 With respect to joint venture heritage, studies of HRM in IJVs predominantly focus on joint ventures located in transformational economies such as China (e.g. Björkman and Lu, 2001; Ding and Akhtar, 2000; Glover and Siu, 2000; Taylor, 2001; Tung and Worm, 2001). Empirical studies dealing with joint ventures from industrialized countries, which are also located in these nations, are rare (Yan and Gray, 1994: 1479).

5 Fourteen of the firms contacted were not in fact joint ventures, or the establishment of a joint venture had not come about. In four cases the setting up of a joint venture had been announced but not effected, one enterprise proved to be a German–French joint venture and two joint ventures had been dissolved.

6 For the interviews the author travelled in each case to the principal office of the joint venture or of one of the parent companies. The interviews lasted between one and three hours, and without exception all were conducted by the author himself. In the first five interviews, both in the USA and in Germany, particular emphasis was placed on the reliability and validity as well as clarity and completeness of the questions. If necessary, any existing deficits were corrected.