The Management of Expatriates: Messages from Europe?

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European based multinational enterprises (MNEs) have increased in number and significance in recent years, linked with the rapid growth of internationalization and global competition. This reflects the growing importance of international economic activity in general which has resulted in the increased mobility of human resources. There is growing recognition that the success of global business depends, to a considerable degree, on the quality of a multinational's human resources and on how effectively these critical resources are managed and developed (Stroh & Caligiuri, 1998), and that the quality of management, in particular, seems to be a critical success factor (Black et al., 1999).

The substantial increase in the number of international organisations has occurred at a time when these organizations are under increasing competitive cost pressures. In such circumstances, it is not surprising that MNE's expatriation policies and practices are coming under closer scrutiny. Much of the research knowledge on the management of expatriates currently available in the international literature is drawn from research focused on North American MNEs. It has been argued that, because of the different research traditions and the limitations of the U.S. databases on which computer-literate researchers rely, North American academics often overlook research which is not reported in U.S. journals (Brewster, 1999): an ironic result in this international research arena. This paper highlights the recent growth of research into expatriation in Europe and argues that this research deserves to be made more widely available to North American academics and managers (1).

The task is approached in the following way. First, we discuss the rapid growth of expatriate research in Europe over recent years. Second, some of the recent European research into the traditional "expatriate cycle" (selection, preparation, transfer, adjustment, monitoring, and repatriation) is examined. We cannot cover it all and have restricted ourselves, generally, to that which has been published in English: and even there we have had to be selective (2). Third, some of the latest developments in European expatriate research which go beyond the issues involved in the traditional topics are explored.

The majority of the work on the management of expatriates has been North American. The hegemony of the U.S.A. in the academic context is understandable given the extensive influence of the U.S. academic tradition in defining the nature of research in general and human resource management (HRM) research in particular (Brewster, 1999). Indeed some leading North American writers argue that ethnocentrism is inherent in U.S. based organizational theory and management education (Boyacigiller & Adler, 1991). In the field of expatriate HRM, North American researchers have made an outstanding contribution to the development of research on the management of expatriates and have "set the agenda" through exercising a defining influence on research and theory in this field. It has been argued (Brewster, 1999) that many American-based organization theories appear-implicitly to assume universality, despite a large body of research substantiating the cultural diversity of values and the impact of such diversity on organizati onal behavior (Hofstede, 1980; Laurent, 1981; Lane, DiStefano, & Maznevski, 1997).

So, we argue that bringing the European research on expatriation to the attention of U.S. academics and managers is worthwhile for several reasons. First, national history has affected the general order of entry into international markets (Yip, 1997) and European MNEs were the first to internationalize. Because of the small size of their domestic markets, European companies tend to have a high percentage of revenues being international and also have a longer history of moving managers around the world (Hamill, 1989). This is in contrast to U.S. MNEs which, typically, have huge domestic markets and tend to underadapt for local markets (Yip, 1997). Based on an index of "transnationality" (which is an average of ratios of foreign assets to total assets, foreign sales to total sales and foreign employment to total employment) a report of the United Nations Conference on Trade and Development on foreign direct investment (cited in the Economist, September 27, 1997) listed eight of the world's top ten MNEs as Europ ean, with only one U.S. MNE is in the top 15 listed. This reflects the importance of the size of the domestic market for U.S. firms (Dowling et al., 1999: 18-19). Second, many European MNEs typically built up overseas subsidiaries that enjoyed a large degree of autonomy. This subsequently limited their ability to switch from the direction of local autonomy towards global integration (see e.g., Philips problems in formulating and implementing globally integrated strategies due to problems with its highly independent subsidiaries, Jeelof, 1989). Third, various studies have found differences in organization structure and management processes between American, European, and Japanese companies (Franko, 1971; Egelhoff, 1984). Bartlett and Ghoshal (1989) argue that American MNEs stress formalization of structure and process while European MNEs place greater importance on socialization. Fourth, there is some evidence from the examination of expatriate "failure rates" that European organizations are more successful th an North American firms at managing the process of expatriation (Tung, 1984; Brewster, 1991; Suutari & Brewster, 1999; Harzing, 1999; and see below) and that many Europeans are better prepared for their role as expatriates (Harris & Brewster, 1999b).

In the past decade there has been a rapid growth of interest in expatriate HRM in Europe and new fields in this area have been opened up by European researchers (see Brewster & Scullion, 1997; Festing, 1996; Brewster & Harris, 1999). Indeed, there has been a surge in the number of conferences, articles, journals, and books devoted to the extensive research being undertaken in Europe into the management of expatriates (Brewster & Harris, 1999; Harzing, 1999).

THE EUROPEAN CONTEXT

The European research reveals similarities and differences between Europe and North America. Europe is very heterogeneous (Weinshall, 1977; Hofstede, 1980) and there are important cultural differences between European countries. However, although Europe is not a monolith (Harzing, 1999), despite the approach of some researchers, there are still some important factors that make research in Europe as such significant. We identify eight.

First, there is the development of the European Union (EU), which involved the dismantling of bafflers to the movement of goods, capital and labor within Europe. This has led to a rapid increase in cross-border trade and higher levels of intra-European foreign direct investment that has intensified the trend toward regional integration. For all the major European countries (apart from the U.K.) more than half their Foreign Direct Investment (FDI) outflows are to other European countries (Dicken, 1998). One direct impact of membership of the EU is that the substantial legal and administrative requirements for foreign workers do not apply to transfers between EU countries. This represents a significant difference between the European and other international free-trade areas and has led to a strong growth of expatriation between European countries and significant changes in the forms of expatriation, which will be discussed below.

Second, research suggests there is a growing emphasis on regionalization as the route to globalisation for many MNEs (Morrison, Roth, & Ricks, 1991). Many international organizations increasingly treat the European market as a single entity and seek to integrate production, marketing, and human resource strategies at the European regional level. A good example of this is Ford Europe who move expatriate managers freely around their European operations, with much more restricted mobility between Europe and corporate headquarters in the U.S. (Dowling et al., 1999).

Third, there has been a rapid growth in the numbers of smaller and medium sized enterprises (SMEs) who have internationalized their operations in recent years (U.N., 1993). Such growth into other countries is significantly easier in the EU. Recent research suggests that theories of internationalization that have been developed from research in larger MNEs do not adequately explain the approaches used in smaller firms (Scullion, 1999b; Monks & Scullion, 2001). At the other end of the scale, the Single European Market facilitated a rapid growth in the number of large cross-border mergers and acquisitions that increasingly became the most important foreign market entry strategy for many larger European companies in the late 1980s and 1990s. In particular, this was a significant departure for French and German MNEs who previously favored organic growth as a means to internationalization. This raised significant problems of post merger management and control and highlighted the importance of cultural differences f acing expatriates transferred between European countries (Hamill, 1992; Morosini, 1997).

Fourth, Europe has more densely populated, highly industrialized countries in a smaller geographical area than anywhere else in the world. Many European citizens can travel to three or four countries in only a few hours' driving time. Most European locations are …