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Weekly UpdatesHuman Resource (HR) managers of Fortune 500 firms facilitated the administration of surveys to expatriates. Information on the survey was used to test two different research hypotheses (H1 and H2 above). The first addressed the extent of firm experience in a given country subsidiary and the proportion of expatriates used in each subsidiary. Therefore, each subsidiary is a case in and of itself. Where the HR Manager did not report on all subsidiaries, this hypothesis could still be tested on any case for which country experience (or subsidiary age) and proportion of expatriates in the subsidiary were provided. The total number of cases considered usable for H1 in this set was 235. H2 addressed the level of overall firm internationalization and the proportion of expatriates used by the firm as a whole. Each HR Manager Survey (or each firm) represented one case. Thirty-two HR Manager Surveys were received out of a total of 46 that were sent out, for a response rate of 70 percent.
Measures
Proportion of Expatriates. The proportion of expatriates in a given overseas subsidiary was calculated by dividing the number of U.S. nationals in each subsidiary by the total number of professional-level employees in that subsidiary. The proportion of expatriates in each MNC as a whole was calculated by dividing the number of U.S. expatriates employed by the firm in all of its overseas subsidiaries combined by the total number of professional-level employees in all of the overseas subsidiaries.
Degree of Internationalization. Sullivan's (1994) composite index was used to measure the degree of internationalization (DOI) of the firm, as it is the most recent conceptualization with sufficiently high reliability (alpha = .79). The DOI index incorporates five objective ratio measures of overseas involvement:
1. Foreign Sales as a Percentage of Total Sales (FSTS)
2. Foreign Assets as a Percentage of Total Assets (FATA)
3. Overseas Subsidiaries as a Percentage of Total Subsidiaries (OSTS)
4. Psychic Dispersion of International Operations (PDIO)
5. Top Mangers' International Experience (TMIE)
The DOI score for each MNC is the sum of each individual measure, where the range of values for DOI is 0.0 (no international involvement) to 5.0 (complete international involvement).
All components of the index were obtainable from published sources. FSTS and FATA were represented by three-year averages (1993, 1994, and 1995) in order to control for changes in exchange rates and accounting standards and were obtained from company annual reports. The logic behind using three-year averages is that currency fluctuations and accounting rules can have profound effects on a company's income statement and/or balance sheet for a given year. Such extreme cases can be omitted from the calculations, while still providing financial data for comparable years. Dun's Directory of American Corporate Families and International Affiliates (1996) supplied the frequencies and distributions of subsidiaries necessary to calculate OSTS and PDIO. PDIO was simply the proportion of those psychic zones identified by Ronen and Shenkar (1985) in which the firm had international subsidiaries. These zones, or country clusters, with the addition of a category for "other' counties, include Anglo, Germanic, Nordic, Near Eastern, Arab, Far Eastern, Latin American, Latin European, Independent, and Other. In order to assess TMIE for each participating firm, data on the career histories of top managers were obtained from Dun's Reference Book of Corporate Managements (1996). This ratio represented the number of years of overseas work experience of all top managers combined as a proportion of the team's total work experience.
Country Experience. Subsidiary age was used to capture the phenomenon of country experience. In the event that an organization had more than one subsidiary in any given country, the age of the oldest subsidiary was used.
RESULTS
The distribution of the firms by industry along the country experience and degree of internationalization continuums are shown in Figure II. It can be seen from the figure that the petroleum/chemicals industry is characterized by greater overall internationalization but not necessarily by older subsidiaries. However, the distribution along the country experience dimension does provide enough variance to test its effect on expatriate proportions based on the sample firms responding in the study.
Correlations and descriptive statistics for the variables of interest are displayed in Table 1. Since the study involves analyses at both the subsidiary and company levels, descriptives are provided for each of these levels. The top portion of the table combines data at the subsidiary and the overall firm level, since it is possible to assign the appropriate company-level DOI score and corresponding proportion of expatriates to each subsidiary. There is a strong, positive association between the proportion of expatriates in individual subsidiaries and the proportion of expatriates used by the firm as a whole (r = .248, p[less than].0l). In addition, there is a high, positive correlation between experience in a given country and overall firm international experience (r = .192, p[less than].0l). However, there is the possibility that, for a firm where data on many subsidiaries were supplied, the corresponding DOI score is more heavily weighted than for a firm reporting on only a few of its subsidiaries. Theref ore, results for DOI should be interpreted with caution, as a given DOI level is likely to have been applied to many data points. The bottom portion of the table, on the other hand, treats company-level information as one case only. At the aggregate level, there is no discernible subsidiary information either on specific experience or expatriate populations in the various markets. Finally, means and standard deviations for the proportion of overall expatriates used by the firm were not computed, as these proportions were infinitely small.
Two sets of multiple linear regressions were run to test the hypotheses for country experience and DOI, respectively. Both country experience and DOI were operationalized as continuous variables in order to maintain the richness of information available. Independent variables in the analyses included country experience (or DOI, in the second set of analyses), the quadratic term, and a dummy variable to control for industry. Results of the regression analyses are shown in Table 2.
Expatriation and Country Experience
H1 stated that there will be a curvilinear relationship between country experience and the proportion of expatriates in that country's subsidiary. A quadratic function did fit the data for country experience and the proportion of expatriates in that subsidiary. However, contrary to H1, this curvilinear relationship is positive (upward slope). The proportion of expatriates in the subsidiary, expressed by the following function, yielded an adjusted R square of .094 (F = 8.792).
prop subsid exp = f([b.sub.o]..ind[b.sub.1]..doi[b.sub.2]..[doi.sup.2][b.sub.3]..e)
This model was significant at the .000 level of confidence. With a substantial number of observations (n = 235), it was possible to explore this relationship further by dummy coding subsidiary age as young and mature and later into three age categories. As a final step, these analyses were repeated for each industry separately. Results of all analyses are shown. in Table 3 and are explained below.
Quadratic Regression. As mentioned above, the quadratic function, while significant, was not in the hypothesized direction. By performing the same analyses for each industry, we also find a significant, positive quadratic relationship between subsidiary age and proportion of expatriates for firms in the petroleum/chemicals industry (F = 5.497, p[less than].01), while a quadratic function did not fit the data for the computers/electronics industry.
One-Way ANOVA (2 Groups). The distinction between young and mature subsidiaries was defined as lower or higher than .25 standard deviation from the mean in either direction. The rationale behind this approach was that a mean split did not provide enough variance between those cases close to the mean on either side. Therefore, it was necessary to eliminate some cases from around the mean, with the intent of removing as few as possible. As a result, subsidiaries less than 17 years of age were considered young, and those older than 26 were considered mature. One-way ANOVA procedures for differences among means revealed a significant difference in the mean proportion of expatriates in young and in mature subsidiaries when considering the sample as a whole (F = 4.453, p[less than].05) and for the petroleum/chemicals industry alone (F = 6.751, p[less than].01). In both cases, the use of expatriates was significantly reduced from the young to mature stages. However, mean proportions of expatriates did not differ si gnificantly across the two categories for the computers/electronics industry.
One-Way ANOVA (3 Groups). The distinction between young, medium and mature subsidiaries was defined by cut-offs .33 standard deviation from the mean. This allowed for considerable variance between the two extreme categories and also divided the sample (both industries combined) into approximately equal groups. As such, young subsidiaries were 14 years of age or younger, medium-aged subsidiaries were those from 15 to 27 years old, and mature subsidiaries were at least 28 years old. One-way ANOVA procedures again revealed significant differences among the mean proportions of expatriates, both for the sample as a whole (F = 5.320, p[less than].0l) and for the petroleum/chemicals industry (F = 6.185, p[less than].0l), but not for the computers/electronics industry. The division into three groups meant that multiple comparisons were made, and therefore Tukey's honestly significant difference test was used to ascertain across which of these categories differences were indeed significant. Table 3 shows that for the full sample as well as the petroleum/chemicals industry, younger subsidiaries employed significantly fewer expatriates than did the medium-aged or the mature subsidiaries. However, for the sample as a whole, there is a slight resurgence of expatriates from the medium to the mature stage. This is not true for the petroleum/chemicals industry. In fact, in this industry there is a continued decline in the use of expatriates across the three stages.
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